In economic difficulty, Cuba accelerates its dollarization 

Cuba will allow from Monday to buy dollars for certain food and hygiene products and will abolish the 10% tax imposed on this currency, while the island, weakened by the strengthening of the American embargo and the coronavirus pandemic , needs currency.

“We will eliminate this 10% tax in the context of hostility and the strengthening of the United States embargo,” Economy Minister Alejandro Gil announced on television.

Banned in Cuba until 1993, the dollar has been hit since 2004 with a 10% tax when you want to change it or deposit it on an account, a response from the Communist government to the embargo.

But the country is facing serious economic difficulties, linked to American sanctions, the crisis of its main partner, Venezuela, and the pandemic which forced it to close its borders at the end of March, depriving it of the foreign currency of tourists who allow him to pay for his imports.

Last October, he had already authorized the sale of household appliances and cars in foreign currency, including the dollar, via magnetic cards linked to accounts that must be opened on the island. But every Cuban depositing dollars there lost 10% of their value.

From now on, this tax is abolished and the network of stores selling only in foreign currency will be extended to shops for food and hygiene products.

“There is a market segment with economic capacity (…), this has been proven with the sales we have made in foreign currency of equipment (household appliances) and cars,” explained the Minister of Economy, ensuring that the sale of food would also continue in CUC (equivalent to the dollar) and in CUP (24 CUP worth one dollar).

It is an “exceptional” situation, he stressed, while tourism, the island’s economic engine, has stopped.

“It is a fair and logical measure,” commented for AFP economist Omar Everleny Pérez, because “the country, to supply its stores, needs a currency to do so” and pay for its imports: ” it is a dollarization “of the economy.

According to Cepal, the UN Economic Commission for Latin America, Cuban GDP is expected to drop 8% this year.

The government is also working on the creation of small and medium-sized enterprises, public and private, and the participation of foreign investors in the production of food.

“These measures are intended to strengthen us, not only to resist but also to move forward and develop,” promised President Miguel Diaz-Canel.

Source: In economic difficulty, Cuba accelerates its dollarization – Boursorama

Vinkmag ad

The Investor

Read Previous

Eurozone: Inflation confirmed at 0.3% over one year in June 

Read Next

Twitter hacking: cybersecurity, a major issue for the US presidential

Leave a Reply