Cuba's dual currency to be eliminated

Cuba's dual currency to be eliminated
Ray Sanchez | Direct from Havana
7:01 AM EDT, May 27, 2008
Havana

Raul Castro's government will eliminate the dual-currency system that is
the bane of so many Cubans but it may take a while, the head of
parliament's economic commission said.

The remarks by Osvaldo Martinez during a visit to Madrid represented the
state's latest acknowledgment that the existence of two currencies has
produced social strains and a class divide on the communist island.

"The government's policy is elimination of the dual currency, which in
some way hurt the national self-esteem, but we need a minimum of
monetary reserves for a normal exchange rate, price and wage reforms and
greater economic efficiency," Martinez said Sunday in an interview
published in El Pais newspaper.

Cuba uses a convertible peso known as the CUC, which is tied to the U.S.
dollar, and a Cuban peso known as the moneda nacional.

Those with access to remittances or jobs in tourism, restaurants or the
thriving black market earn CUCs, which are worth about 25 times the
peso. State workers and pensioners are paid in pesos, which must be
converted to CUCs to purchase most goods.

The Cuban government has not eliminated the peso because it lacks
sufficient foreign reserves to back and circulate only CUCs.

The U.S. dollar, which circulated in Cuba from the mid 1990s to late
2004, was removed by ailing former President Fidel Castro because of the
growing class divide. Now whenever a dollar is converted into CUCs, the
government charges a 10 percent tax.

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