Government of Cuba begins selling US dollars

The Government of Cuba announced that as of August 23, it will begin to sell US dollars and other currencies on a limited basis in the official financial market, something that has not happened for years.

The Minister of Economy and Planning, Alejandro Gil, advanced this measure in a Cuban public television program, a considerable leap -although restricted and gradual- in the complex implementation of an authentic exchange market in the country.

The goal is “to start the sale of foreign currency in the financial system starting tomorrow,” said Gil. The exchange rate will be 120 pesos (CUC) per dollar, a rate similar to that of the informal market and that of the incipient purchase by the State. The operation will have a commercial margin of between 3% and 6%.

Since the beginning of August, the Cuban State has been buying international currency at this exchange rate of 120 to one. Until then, the official rate was 24 cup per US greenback, a rate that is still maintained for companies and state agencies. The minister explained that the Government's intention is to “continue advancing in the construction of the exchange system” and retake its “control”.

These foreign currency sales operations will only be in 37 official exchange houses, CADECA, and first of all in cash and exclusively for natural persons, the minister president of the Central Bank of Cuba (BCC), Marta Sabina Wilson, also said in that program.

The initial cap per person per day will be 100 US dollars or the equivalent amount in another international currency. Wilson stressed that this foreign exchange market also has another “limit”, since the State's sales will depend on previous purchases. The dollars acquired by individuals, the minister explained, cannot be deposited in freely convertible currency (MLC) accounts, a Cuban virtual currency that is only used to buy in certain State stores (the most widely stocked at present).

Una cosa es el mercado cambiario y otra cosa son las tiendas en MLC. Un dólar en efectivo que entra hoy en el mercado cambiario es vendido en el mercado cambiario en efectivo. Hay una demanda de dólares en efectivo en el país. pic.twitter.com/GRSljwe7hD

— Ministerio de Economía y Planificación de Cuba (@MEP_CUBA) August 22, 2022

In a second stage, natural persons will be able to buy foreign currency in banks and through bank accounts. Also, it is planned that the number of exchange points will be expanded later. The minister affirmed that he hopes that the State enters more currency than what it sells to natural persons and to be able to use it to import.

Cuba imports 80% of the goods it needs, according to the United Nations, and the current problem of shortages that the country suffers is due in part to the shortage of currency from the Cuban State, a communist system that maintains a monopoly on foreign trade.

The Cuban State had not bought and sold dollars since October 2004, when it was officially replaced by the convertible peso (CUC) and the subsequent establishment of the MLC in 2019.