CUC to cease circulation in Cuba on January 1 | AND…

Cuba will begin its process of monetary unification and will dictate on January 1 the release of the convertible pesoCUC) -parity with the dollar-, which will leave the Cuban peso (CUP) as the country’s sole official currency, with a single official conversion rate of 24 pesos to the dollar.

The announcement, which ends months of speculation about when the CUC will disappear and the CUP’s new exchange rate, was made on public television by the country’s president, Miguel Díaz-Canel, accompanied by the former president and leader. of the Communist Party of Cuba, Raúl Castro.

“We reaffirm the importance and importance of this task which will put the country in better conditions to carry out the transformations required by the update of our economic and social model on the basis of the guarantee to all Cubans of the greatest equality of rights and opportunities ”, declared Díaz-Canel.

A pending task

Monetary unification, which took seven years to materialize, is one of the main tasks outstanding under the economic reforms promoted by Raúl Castro for a decade.

Officially renamed “command task”, it consists of the disappearance of the CUC, created in 1994, and the establishment of a single exchange rate, which in the public sector so far is the parity between CUP, CUC and dollar (1: 1: 1), while for the general public it is 25 CUP for every CUC or dollar.

This multiplicity of exchange rates has distorted the accounting of public enterprises for years, where the CUP and CUC are merged into one in the books of account, making it difficult, among other things, to determine the actual state of the centralized Cuban economy.

From last October, the Cuban government began to report frequently on the unification and package of joint measures, a fact that increased speculation and prompted hundreds of Cubans to visit banks and offices. exchange to get rid of the CUC. which have been devalued in the informal market.

At first, the authorities predicted that from “day zero”, there would be a six-month period during which people could change the CUC in stores and banks.

The latest announcement of a single rate of 24 Cuban pesos per dollar ended up dismissing forecasts of a serious official devaluation of the national currency, a problem that worried the population because they feared that their savings in CUP would lose value.

This regulation will in turn be accompanied by wage reform, pensions and the removal of subsidies, although centralized prices will be maintained for a small group of basic goods and services, including fuel, electricity or infant milk.

No magic solutions and risks

In his speech, Díaz-Canel underlined that the end of the double currency will not be “the magic solution to all the problems” of the economy, but “will allow more solid progress”, in a context marked by the economic crisis. international Covid-19 and the effects of the blockade imposed by the United States.

“The task is not without risks. One of the main ones is that inflation is higher than expected, due to the supply deficit. Abusive and speculative prices will not be allowed. They will have to face socially containment measures and severe sanctions for non-conformists ”, assured the president.

The elimination of dual currency comes at a time of great economic strain for the country, whose financial situation has been exacerbated by the slowdown in tourism, the crisis in its ally Venezuela and the delay in updating its system. centralized.

Shortages and uncertainty have pushed up prices on the black market as the government seeks to curb speculation and hoarders.

One of the last official strategies has been the partial dollarization of the economy, a solution that has sparked controversy among the vast majority of the population without access to remittances from abroad.

At the end of his speech, Díaz-Canel remarked that they would be “receptive to the criteria of the population” and reiterated that “the conditions are created so that no one is left homeless” on the island.