It is Never too Late to Set Things Right

It is Never too Late to Set Things Right / 14ymedio, Pedro Campos
Posted on March 19, 2016

14ymedio, Pedro Campos, Havana, 19 March 2016 — Foreign Minister Bruno
Rodriguez, commenting on the latest measures of the Obama Administration
to loosen the strings of the blockade-embargo, announced Thursday at a
press conference that the Cuban government had decided to eliminate the
10% tax on the dollar, established in 2004.

When it goes into effect, this measure will have an immediate positive
effect on people's pocketbooks and on the country in general. The dollar
will be worth one Cuban Convertible Peso (CUC) and remittances sent by
family and friends abroad will automatically increase their purchasing
power by 10%. For every dollar that comes into the country in this way,
the recipients will have 10 cents more to spend on food or whatever they
need.

People with account in dollars automatically earn 10% relative to the
CUC and the "little" Cuban peso (worth 4¢ US). Foreign investors will
receive a 10% reduction in the costs of doing business in Cuba and, in
general, the expenses of foreigners in the country will be reduced by 10%.

In addition, the prices of products sold in CUCs are effectively reduced
by 10% and the cost of paying a Cuban work force is reduced by the same
amount. A foreign concern that pays a Cuban worker 100 CUCs would
normally face a cost to do so of 110 CUCs, but now will shell out only 100.

In the modern global economy, one of the measures taken by countries to
stimulate their sales and investment is the devaluation of the national
currency. This measure, in fact, is a devaluation of the national
currency, the CUC, by 10% against the dollar, although it is being
presented in a different light.

Several years ago, when the Cuban government implemented the tax of 10%
on the value of the CUC against the dollar, it was a hard blow, not to
the "empire" which continued to strengthen, but to the Cuban economy and
the pockets of its citizens who receive remittances from abroad

This move will allow the dollar to be accepted by individuals in their
businesses on par with the CUC and will avoid cumbersome exchanges,
unless the Government specifically prohibits the circulation of the
dollar in Cuba, which would be counterproductive. In fact, Cubans can
carry dollars, operate and shop with them.

If such a prohibition does not appear, it is assumed that with
increasing American tourism the free circulation of the dollar in the
Cuban economy will also increase and this will create better conditions
for establishing, in the near future, a single currency although in the
short-term it is likely that we would have three basic currencies: the
Cuban peso, the CUC and now the dollar on par with the CUC.

Silently, the Cuban economy would thus assume a process of dollarization
that would connect us well to US market, favoring the economic
development of the country in the short and medium term. "After the
feast comes the reckoning," as my grandmother would say.

This could ultimately be considered the government of Raul Castro's most
important economic measure, given the immediate impact it would have on
ordinary people's living standards and its effects as a stimulus to
tourism, foreign investment and the purchase of Cuban products in the
world market.

On 2 September 2007, taking as a starting point the ideas of democratic
socialism, a paper titled "15 proposals for the revitalization of
socialism in Cuba" was published, suggesting: "Restoring parity between
the Cuban Convertible Peso against the dollar, with a minimum exchange
tax to stimulate tourism, foreign investment (preferably indirect and in
joint ventures), remittances and internal and external movement of the
economy."

It is never late to set things right.

Source: It is Never too Late to Set Things Right / 14ymedio, Pedro
Campos | Translating Cuba -
http://translatingcuba.com/it-is-never-too-late-to-set-things-right-14ymedio-pedro-campos/