Financial Reform Begins in Cuba 0 7

Cuban authorities have announced a transition to a new system for calculating the exchange rate of foreign currencies — primarily the US dollar and the euro. At its core is a market mechanism, where the value of the currency is determined based on the relationship between supply and demand.

The launch of the innovation was announced the day before by the head of the Central Bank of Cuba, Juana Lilia Delgado, in a televised address. According to her, the introduction of a competitive exchange rate is seen as the starting point of a phased process of dollarization of the national economy.

Currently, two official exchange rates continue to operate in the country: for legal entities — 1 US dollar for 24 Cuban pesos and for the population — 1 dollar for 120 pesos. While maintaining this system, the Central Bank is additionally introducing a third rate — a floating one, which will be set daily by the regulator.

The new mechanism aims to eliminate the shadow turnover of foreign currency. Earlier in December, the exchange rate on the unofficial market among street exchangers rose to 450 Cuban pesos for $1. The formation of the floating rate will rely on indicators from the free currency market, published in open internet sources.

Experts also noted that the Central Bank's announcement of the launch of the new scheme coincided with a large-scale cyberattack on one of the websites that published independent data on market currency rates.

The average salary in Cuba is very low and fluctuates, but in 2023 it was about 4648 Cuban pesos (CUP) per month (which is equivalent to approximately 15-30 US dollars on the unofficial market, and much less at the official rate), with an increase compared to previous years, although real purchasing power remains low due to a shortage of goods.

Each Cuban receives a food package at a subsidized price every month. It includes rice, chicken, coffee, and bread. Local residents pay very little for utilities and transportation. Therefore, many Cubans are satisfied with their lives, although the material situation remains dire.