Cuba allows stores to use the dollar

23-10-2019

Source: Flickr

Fifteen years after the elimination of dollar sales in Cuban stores, by the end of October 2019, the government of the island will return to allow the payment of certain products in dollars and other international currencies. Vice president Salvador Valdés Mesa confirmed on the television program Mesa Redonda that appliances such as flat-screen televisions, refrigerators and air conditioners, as well as electric motorbikes and auto parts will be marketed in dollars in more than 70 selected stores.

The idea is not new since the dollar had already circulated in Cuba between 1993 and 2004, as part of measures to address the economic crisis which was caused by the demise of the Soviet bloc, the Socialist island's main economic and political ally. Valdés Mesa explained that the measures will "ensure that Cubans will be able to enjoy basic food, grooming and cleaning products" and aim to alleviate Cuba's international currency deficit which was caused by the "intensification" of the economic sanction measures on the part of the United States.

Another objective of the government is to prevent families and the private sector from continuing to import goods through informal routes, especially through people who travel to Panama and other destinations. Habana seeks to keep and spend foreign currencies within Cuban territory.

However, the new initiative also holds the risk of a dollarization of the economy and may complicate the monetary reform aimed at unifying the two currencies circulating on the island, the Cuban peso and the Cuban convertible peso (CUC). Economy Minister Alejandro Gil rejects the notion: “We do not intend to eliminate domestic currencies, to expand sales in dollars or in any foreign currency to the rest of the retail network, or to increase dollar sales in general, neither will we allow for the dollar to circulate in cash".

On the 60th anniversary of the revolution, the Cuban economy once again faces a crisis that obstructs structural reforms in the country's economic system which started during the mandate of Raúl Castro, and which has been inherited by President Miguel Diaz-Canel.