* Pilot projects to be generalized
* Unification still months away
By Marc Frank
HAVANA, Oct 22 Cuba has approved a plan to
gradually eliminate its dual monetary system as part of reforms
aimed at improving the country's economic performance, a
communique carried by official media on Tuesday said.
"The Council of Ministers has adopted a chronogram of
measures that will lead to monetary and exchange unification,"
the government statement said, giving few details.
"(Unification) is imperative to guarantee the
reestablishment of the Cuban peso's value and its role as money,
that is as a unit of accounting, means of payment and savings,"
Since 1994, after the fall of the Soviet Union, Cuba has had
two currencies. One is pegged to the dollar, while the other is
valued at a fraction of the greenback's value, angering the
population which is paid in the latter, and complicating
accounting, the evaluation of performance, and trade for state
Plans to decentralize and introduce market mechanisms into
the Soviet-style economy adopted by the Communist Party in 2011
under the leadership of President Raul Castro included currency
The two local currencies are the peso (CUP) - in which most
wages are paid and local goods priced - and the convertible peso
(CUC), used in the tourism industry, foreign trade and upscale
eateries and stores carrying imported goods. Neither are legal
tender outside Cuba.
In a country where almost the entire economy is in state
hands and prices fixed, companies must exchange dollars and CUCs
with the government at the official exchange rate of one peso,
while the CUC is currently valued at 25 pesos by the government
at exchange offices.
The unification of the two currencies is expected to be a
gradual process that will take up to 18 months, according to
Cuban economists, and will involve devaluing the CUC and perhaps
revaluing somewhat the peso.
The official communique said the government would make good
on the value of the CUC by announcing any devaluation and giving
people time to convert their holdings.
The government has already begun pricing more goods and
services in pesos and collecting taxes in pesos, even as it
adjusts the official exchange rate by allowing some companies to
exchange dollars earned abroad for up to 12 pesos, instead of
one, in an effort to increase exports and provide more pesos to
the companies to increase wages and buy local products.
The government statement said these measures would become
more generalized in the coming months, as would the purchase of
CUC priced goods in pesos at the 25 peso CUC exchange rate.
"The main changes in this first phase will be in the
business sector to foster conditions that will lead to increased
efficiency, better measurement of performance and the
stimulation of sectors that produce goods and services for
export and the substitution of imports," the statement said.