The official newspaper Granma, representing the Communist Party of Cuba, recently published an article supporting the partial dollarization of the island's economy. The regime claims this approach is "necessary" to manage currency flow and combat the illegal exchange market operating in Cuba. During the Fourth Ordinary Period of Sessions of the National Assembly of People's Power, Prime Minister Manuel Marrero Cruz argued that this step aims to redirect foreign currency currently circulating in the informal market into state mechanisms.
"The primary goal is to gain control over the currency that is now illegally circulating in our social environment, so we can use it for the 'benefit of the population,'" Marrero stated. While the government maintains that the ultimate aim is to de-dollarize the economy, it acknowledges this measure as temporary. Specific areas such as export-focused sectors and places like international pharmacies, optical stores, and airport waiting rooms already accept foreign currency.
One of the most controversial measures announced includes imposing duties payable in foreign currency for non-state management forms and allowing cash payments in dollars in certain establishments. Although the government justifies this as an attempt to solve the "distortions" of the informal market, these actions perpetuate an unequal economic model where only those with access to foreign currency can meet basic needs or participate in strategic sectors.
Wholesale and retail sales in foreign currency will also be permitted but require centralized approval, reinforcing a dependence on bureaucratic decisions historically plagued by inefficiency and corruption. The regime admits there's an uncontrolled aspect of dollarization and claims this model seeks to regulate the chaos of the illegal exchange market.
However, this justification seems to overlook the core issues: an outdated monetary system, the rapid devaluation of the Cuban peso, and the state's inability to provide equitable access to basic goods and services. While official statements promise "well-being for the population," the reality is grim for those without access to dollars or euros, leaving them excluded from these markets and facing a national currency that loses value daily.
Even though the government describes these measures as temporary and necessary, it fails to explain how or when this partial dollarization scheme will be dismantled, or how it will ensure that the benefits reach the general population. Instead, these actions appear to widen the gap between those with access to foreign currency and those surviving on Cuban pesos in a country where most wages are insufficient to cover basic needs.
The rhetoric from Granma and the government attempts to normalize dollarization as a necessary evil, but for many Cubans, it serves as further evidence that the regime's priorities remain far from alleviating the hardships faced by the majority. The Cuban government, through its official social media accounts, shared details of these measures, emphasizing their "temporary" nature and focus on strategic sectors.
According to the prime minister, these actions aim to regulate and control circulating foreign currency to strengthen national production. "The goal is to intervene, to regulate, and officially authorize, albeit temporarily, dollarization schemes, especially for export sectors to replenish and continue production. This should also impact national currency production for the population," Marrero noted.
Approved measures include wholesale and retail sales in foreign currency, though under strict centralized regulation and only in exceptional cases: "No one can sell in foreign currency without justification and approval." Another highlighted action is the implementation of duties payable in foreign currency, primarily in foreign trade operations by non-state management forms.
Moreover, cash payments in foreign currency will be allowed in certain establishments, addressing difficulties in electronic payment processes that the government claims result in income losses. These actions have been implemented in specific sectors such as tourism, Casas de Habano, international pharmacies, optical stores, international clinics, and last-minute waiting areas in airports, reflecting a focus on services traditionally involving foreign currency transactions.
Additionally, frameworks have been approved for direct payments in foreign currency to certain producers. This measure targets those producing exportable goods or agricultural producers to allow them to acquire supplies and maintain operations, ultimately benefiting the national economy.
The announced measures demonstrate an attempt by the government to manage dollarization in a centralized and controlled manner, though they have sparked questions about their impact on economic inequality and the general population's limited access to the foreign currency necessary to engage in these markets.
Understanding Cuba's Partial Dollarization Measures
What is the primary goal of Cuba's partial dollarization?
The main objective is to control the currency flowing illegally in the informal market by redirecting it into state mechanisms, ultimately aiming to benefit the population.
Which sectors in Cuba are affected by dollarization?
Dollarization impacts sectors such as export-focused industries and specific establishments like international pharmacies, optical stores, and airport waiting rooms where foreign currency is already accepted.
How does the Cuban government justify the dollarization measures?
The government argues that dollarization addresses distortions in the informal market and aims to strengthen national production by controlling the currency flow, despite being a temporary solution.
What are the criticisms of Cuba's dollarization policy?
Critics argue that these measures perpetuate economic inequality, as only those with access to foreign currency can meet basic needs or engage in strategic sectors, leaving the majority at a disadvantage.