Cuba Announces Opening of Foreign Currency Stores and an End to Taxes on U.S. Dollar

Cuba is set to open government stores across the island beginning on Monday that will accept U.S. currency to purchase hygiene and food items, and will do away with a 10% tax that is currently added to purchases made with greenbacks.

The new measures, made public on national media Thursday night, is part of an effort to battle the increasing economic crisis, which the government blamed on internal deficiencies, the collapse of subsidies from Venezuela and sanctions imposed by the United States.

The announcement featured an excerpt from a meeting of the Council of Ministers in which the island’s appointed President Miguel Díaz-Canel outlined the reforms.

Díaz-Canel said that the government cannot continue “doing the same thing” in relation to the country’s economic model because “it is not giving results.”

He added that the unification of the monetary system in Cuba will be done “in the shortest possible time,” without providing details. Two currencies currently circulate in Cuba — the Cuban convertible peso (known as CUC), which the government sets at an equal value to the dollar, and the national currency, which has a significantly lower value of 24-$1.

In his address confirming the opening of the dollar stores, a speculation that had been circulating for days, Díaz-Canel said that “we live in the definitive collapse of the paradigms of neoliberalism.” He also praised the book by former U.S. National Security Adviser John Bolton, who has been critical of President Donald Trump.

Díaz-Canel blamed “the blockade” (embargo) and “financial persecution” for the shortage of basic necessities on the island.

Economy Minister Alejandro Gil, meanwhile, said the country has been without tourism — a vital source of funds — for four months, resulting in an increase in the budget deficit.

Among the measures presented by Gil is the elimination of the 10% tax imposed on transactions in dollars since 2004.

“This is a measure that benefits all Cubans inside and outside the country, … one that is taken amid the intensification of the blockade of the United States and allows for more purchasing power,” he said.

The lack of foreign exchange due to the closure of tourism in response to the coronavirus pandemic is compounded by a decrease the country’s traditional exports, Gil said, pointing to a tightening of the U.S. embargo.

“There has been a tightening of the measures,” Gil told TV viewers. He added that Cuba will continue with a centralized economy and will try to “defend national production” and “banish the import mentality.”

Cuba imports about 80% of the food it consumes.

Gil also said that the government will keep the market regulated but through secondary mechanisms and not using coercive measures. State-owned companies will have greater management capacity and competitiveness, savings and efficiency will be encouraged, he said.

The priority for the government in the coming months will be national food production, said Gil, who labeled the current form of management as “monopolistic.”

In his address, Díaz-Canel also referred to food production as a “priority” of the state. “We have to learn to live with fewer imports and with more exports, promoting national production to meet domestic demand,” he said.

Gil, the economy minister, said the government will work toward the creation of state-run private and mixed micro companies, both small and medium-sized.

“They won’t be ready tomorrow,” he said, adding that the government is committed to work toward regulating these new economic entities.

Gil also said regulations are underway to allow small private companies to export through state-owned companies. He also referred to an “expansion” of private work and the empowerment of “non-agricultural cooperatives,” without providing details.

Gil also announced that citizens would receive an increase in government rations, including rice and beans, during the months of July and August.