Last Friday AP’s
Based on the AP’s account (English here, Spanish here; there is different information in the two articles) the message seems pretty clear: a) the party recognizes that Cubans want the dual-currency system to end, b) it wants the public to understand that change will be gradual, and c) the key is increased productivity.
The paper is based, AP says, on the Central Bank’s view of the situation. It recommends gradually increasing the pesos’s value relative to the convertible peso, with gains in productivity, not a pre-cooked timetable, setting the pace.
Moving gradually, the central bank figures, it can avoid setting off inflation or a run on merchandise in stores.
“The elimination of the dual currency will lead to better measurement of economic efficiency and will be a positive factor to promote our development…but it is not a measure that will in itself create wealth,” the paper says.
So the bottom line in terms of the party’s message is that action on the peso will be gradual, and the faster production increases, the faster it will happen – similar to messages we have seen in articles such as this. And in policy terms, the bottom line seems to me to be that the government is setting the bar high for its own action in raising production throughout the economy.
What interested me more was a secondary point: the Central Bank wants to see a reduction in “indiscriminate” subsidies, because a reduction in government spending will make its currency transition easier.
There are a number of “indiscriminate” subsidies in Cuba, but my guess is that this is a reference to the biggest of all, the distribution of food to every household on the island through the ration book (libreta de abastecimiento), regardless of income.
As discussed here, if
The agriculture ministry enterprises that collect, warehouse, and distribute products that are the state’s exclusive domain – potatoes, dairy products, etc. – would have no more reason to exist.
So what would be in play would be a more rational approach to public assistance, a big reduction in the agriculture ministry bureaucracy, and a reduction of the state’s role in that sector as these intermediary enterprises disappear.
Is this kind of “structural change” possible? Maybe so – officials have talked about the possible disappearance of the libreta, the central bank seems to be voting in favor of it now, and stories from the agriculture sector hint in that direction. Like this one, about how milk producers in
Finally, the paper contained this nugget: 59 percent of Cubans’ bank savings are in pesos, 36 percent in convertible pesos, and five percent in dollars. So if you exclude mattress money, the action taken by the Central Bank in 2004 succeeded in soaking up dollar liquidity.