Adiós, CUC

[oliverdst]

https://www.cubanet.org/destacados/exclusiva-castro-da-un-ultimatum-al-cuc/

[El Presidente]

Castro gives ultimatum to CUC

The governor has warned financial institutions that have until year-end to eliminate the convertible peso

Friday, October 14, 2016  |  CubaNet  |  46 

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The monetary duality in Cuba has the days counted (portfolio.com)

MIAMI, United States.- George is Canadian and was in Cuba as a tourist. Their holidays were a pretext to explore the country and see if there was a good environment to invest. But his visits to shops, restaurants and hotels in Havana filled him with bewilderment.

Having traveled around much of the world, he had never encountered a country where two national currencies issued by the same bank, both with different types of changes, officially circulated, and what struck him most was that they divided the population according to With the level of access to each and its exchange values.

Other foreign businessmen and even Cuban officials warned him about how difficult it was to create and prosper business within the island, among other things, because of this duality and, consequently, Allan preferred to wait for a next monetary unification that the Cuban government Has been announcing as "imminent" since the middle of 2015.

Nothing has yet materialized, but all analysts agree that monetary duality, in addition to complicating the current financial scheme, undermines the increase of foreign investors and prevents implementation of most economic growth plans on the island.

This obstacle has been recognized even by the main architects of the new scenario that is projected towards 2030, so that Raúl Castro has given an ultimatum to the Cuban financial institutions and institutions so that the so-called "day zero" is executed before the 31 of December of this year, according to confirmed to CubaNet high officials of the ministries of Economy and Finance and Prices that, because of security, do not want to reveal their identities.

"The 2017 must start with the total elimination of CUC . For months, in a discreet way, measures have been implemented to reduce their circulation and recover excess cash in the hands of the population. We are talking about figures that exceed one hundred million dollars and that do not go through the banks ", informs an official of the National Bank of Cuba.

And he adds: "One of the factors that has delayed the unification is precisely the excess of circulating and avoiding a catastrophic inflationary phenomenon with the measure. (...) First we had to withdraw all that money that we knew was in the hands of self-employed and black market and does not return to our banks because other alternative banking structures have been created, illegal today in their hands, We calculate more than 40 percent of the money issued (by the Bank). That was a problem, "the official said.

Another director of the National Bank of Cuba also confirmed to CubaNet the proximity of the so-called "zero day" and offered details of what happens in the current phase:

"It has to be before the end of the year because that is the order and we are already working on the final details. (...) These have been the most difficult months because unification has forced measures that have increased the shortage in the networks of commerce, measures that have joined with others that seek to increase the reserves of foreign currency. (...) The government is preparing to request million-dollar loans from international organizations that need guarantees, and we are in the process of negotiating debts accumulated over decades that total more than 30 billion dollars, "said the expert.

But these have not been the only problems that have slowed down zero day, updating the economic system of state-owned enterprises, readapting the planning models to use single currency has also been difficult. Jorge Luis Gómez, an economist at a state trading company, explains:

"The current model and even the previous ones are very complicated because we have been working with two currencies since the 90s, but it happens that we adapt to these schemes and our minds work that way. (...) With unification (things) become simpler but that very complicated model justified much of the inefficiency and helped hide, on the one hand, incompetence and disasters and, on the other hand, thefts. (...) It has had to work hard to assimilate this coming, "says Jorge Luis.

Another official from the Ministry of Finance gave more details on the matter: "It has been announced since 2014, after which it had to be postponed until the end of (20) 15 but it can not wait any longer because it paralyzes other issues. (...) Now we are discussing how the exchange rate will be fixed, which will undoubtedly diminish significantly. (...) The unification will come coupled with a decrease in the current exchange rate and some prices, not all, but that is not the most important part for now, as shortages will continue because of the policies to reduce imports, Productivity and efficiency of state-owned enterprises and continue to increase foreign exchange reserves. (...) Rates between 15 and 18 (CUP) are handled for each CUC. (...) There will be a reasonable time for people to go to branches and exchange houses, which will be governed by the rate of that day (...). Individuals with CUC accounts will not be affected by the devaluation because they will be subject to the exchange rate in force at the time the accounts were opened. "

A well-known specialist from the Cuban Economy Research Center, also linked to the Ministry of Finance, said that the delay was not so much a readjustment of the model, but because some studies show that an immediate devaluation of the Cuban peso as a consequence of the Coin accumulation:

"There is no confidence in banks on the part of people, on the one hand, but there is no productivity that supports change, so everything conspires in favor of a devaluation, or rather an increase in devaluation because Stability of the Cuban peso is not real (...). You could expect reactions of discontent because the CUC causes a psychological effect, it seems that you are paying less but when everything is in national currency many people will have for the first time an idea of how poor they are. (...) That is why it was decided to begin the change in the networks of commerce and not of abrupt way. (...) On the one hand there are many who will benefit from the decline in the exchange rate because they will be able to buy more dollars with their wages, but what will happen to those who keep their money by other means or just under the mattress? (...) It has also been proven that people are accumulating dollars (North American) foreseeing day zero and has begun to control the sale of foreign currency and could even get to a playpen because the strategy is to retain and accumulate foreign currency, "explained the specialist.

So far, the Cuban government has not made public the day the CUC will disappear or the way in which it will do so. However, in the streets people have begun to worry about the so-called "zero day" and its repercussions on the domestic economy, also comment on the possibility of issuing new bills and denominations, something that, according to officials of the National Bank of Cuba, has no real basis.

 

[oliverdst]

Thanks. Too lazy to do that using mobile.

[puromaniac]

The reports of my death have been greatly exxagerated. At least, prolonged. If CUCs could talk.