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October Monday

Cuba advances in monetary ordering to improve economy


HAVANA, Cuba, Oct 14 (ACN) The monetary order to be implemented in Cuba is not a necessary problem, it is not a step backwards, it is a measure which will allow the country to be in a better condition to boost its economy and we have to face it with a practical and optimistic vision, said on Tuesday deputy prime minister Alejandro Gil Fernandez.

Gil Fernandez, who is also minister of economy and planning, explained at the TV and radio program "Mesa Redonda" for the four announced tasks (solve the duality of exchange, monetary, eliminate excessive free and improper subsidies and make a transformation of income) because one leads to the other and are necessary for the transformation of the nation.
About the process of monetary and exchange unification, Marino Murillo Jorge, member of the Politburo and Head of the Commission for the Implementation and Development of the Guidelines, reminded that it will be done by removing the Cuban Convertible Peso (CUC), it must be done on the first day of a month and the Central Bank of Cuba will announce that it will not be issued anymore.
It is necessary to give people time to change that CUC and the State will be collecting it during a period of time that is being considered not to be less than six months, he said.
The exchange rate unification will not be a long or gradual process, but it will lead to a high devaluation, which is carried out seeking competitiveness and imposes a level of pressure upon the business system that has to face the effects, the official emphasized.
There will be a process of devaluation transfer to product costs and some will be reflected from day one; the problem is to ensure that wholesale price growth does not exceed the design, Murillo Jorge added.
In the business system, a group of companies will have to make a great effort to support the devaluation, and in a first year they could have losses, so a certain level of financial resources has been designed for that period to subsidize losses and thus ensure that basic goods are maintained and unemployment is not generated.
The devaluation will also allow for the correct measurement of effective import substitution because it will make it possible to compare prices of domestic producers with those of the international market.
There will be inflation, and the most important thing is that it should not be greater than that designed, and there are methods to achieve this.
There is a group of goods in the retail market that have to do with the population's consumption and their formation is going to remain centralized; some will maintain subsidies and others will not, he continued.
There are other indirect methods for controlling prices, such as increasing supply, which is now a little difficult because of the context, but others will be used, Murillo Jorge concluded.

 

 

 

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