One day after the government of Cuba announce that will not accept any more cash dollar deposits In their banks as of June 21, as a result of the United States sanctions, many citizens reacted by queuing in front of bank branches this Friday.
Some experts considered that the “uncertainty” that this decision opened is a big risk for an economy like that of the island, subjected to a deep crisis.
“This is a measure for my taste hasty and out of context,” Maricela Domínguez, a 66-year-old self-employed worker, told The Associated Press in front of a bank in Havana as she stood in line.
“The State is going to have in the next seven days a collection of dollars that is higher. What is going to happen next? There are many unknowns,” he commented.
On Thursday night, the Central Bank of Cuba (BCC) announced through an official note and with officials appearing on television that as of June 21, people will not be able to deposit effective dollars in their accounts in US currency in the entities that operate in the country.
The president of the BCC, Marta Wilson, explained that the decision is due to the fact that Cuba has an “accumulation” of dollar bills that it cannot place in foreign financial entities due to the persecution that the United States has on the island, especially in its financial sector.
Cuban dollar and peso bills, in a file photo. Photo: REUTERS
Doubts and criticism
On the street and on social networks, the argument was criticized, because last month the authorities themselves stopped selling dollars at the airport – the only branch that did so – at the official rate for those who traveled abroad under the argument that they did not there were currencies.
The Minister of Economy, Alejandro Gil, acknowledged that the country faces serious liquidity problems in the framework of a very tense situation due to the restrictions imposed from Washington and the paralysis caused by the Covid-19 pandemic.
Shortages, queues, price increases and the black market affected Cubans in these months. The Gross Domestic Product decreased 11% in 2020.
Added to the crisis caused by the pandemic was a profound economic reform that the government of Miguel Díaz-Canel launched from January 1, with the unification of the two currencies in force until then, which in practice meant a devaluation and brought accompanied by a marked increase in prices.
The official rate establishes that the dollar is equivalent to 24 Cuban pesos, but in practice the State does not sell green money, so the only way to get it is in the informal market, which reached more than 60 Cuban pesos for one dollar before the announcements.
Many Cubans woke up puzzled by the announcement about dollar deposits. Photo: XINHUA
Given the lack of income in foreign currencies – tourism and remittances are vital and stagnant – the government in recent months opened stores in dollars for the population, but to buy people must pay with cards that Cubans feed from their accounts. in that currency, either by obtaining it by some means -informal- and by depositing -something that they will no longer be able to do- or by transfers from abroad.
Thursday’s BCC ruling indicated that those accounts Yes, they could be recharged from abroad or with cash deposits but in other currencies, such as euros.
Experts said that this initiative is likely not to decrease so much informal change.
“The informal currency market has different segments. Regarding cash deposits in MLC accounts (freely convertible currency, the official designation), the use of usd was displaced, but in other segments it will continue to flow,” wrote economist Pedro Monreal on his Twitter account. “We will have to see what happens.”
For his part, the economics professor at the Pontificia Universidad Javeriana in Cali, Pavel Vidal, agreed before the AP that the BCC measure may not have such a decisive influence on the exchange rate of the dollar in relation to the peso and it does it will depreciate them further on a euro basis due to ‘uncertainty’.
The Cuban government argues that the new economic measures are due to the United States sanctions. Photo: XINHUA
“The state banks collect in the short term a percentage of the dollars that are in the street, at a time when there are great problems of liquidity in foreign currency to buy food, medicine and supplies … when there is a shortage and social unrest without recent precedents in the country, “explained Vidal.
Furthermore, “due to the sanctions of OFAC (Office of Foreign Assets Control is of the United States Department of the Treasury), Cuban banks reduce their financial risk if euros and other currencies begin to enter the country, instead of dollars. “added Vidal.
“But this risk, in part, is being transferred to families,” he remarked.
Former President Donald Trump applied 240 measures against Cuba pushing for a change in the country’s political model.
The sanctions include the suspension of cruise ships, restrictions on travel and remittances, placing the island on a list of terrorist countries and the persecution of third-nation banks that dare to operate with Cuba, imposing heavy fines on them. His successor, Joe Biden, did not change these sanctions.
Source: The Associated Press