It was also a necessary component of opening up the tourism industry, which operated in dollars. Legalisation transferred the benefits of using dollars from individuals to the state, so that everyone could benefit. However, “black market” use of US dollars had become so widespread that prohibition was unworkable. Announcing the legislation in a speech on 26 July 1993, President Fidel Castro had made his distaste clear, warning of emerging inequalities as those in receipt of remittances would enjoy “privileges that the rest do not have”, something “we are not used to”. Possession of the dollar had been prohibited since 1979. This scenario both complicated and lent urgency to the process of monetary ordering.Ĭuba’s dual currency dates back to 1993, the worst year of the Special Period, when the US dollar was reluctantly legalised and allowed to operate alongside the CUP. Cuba needs hard currency to purchase on the international market over half the food, fuel, medicines, and other vital resources consumed on the island are imported, hence the unfilled shelves and long queues. Hard currency receipts were just 55% of planned receipts in 2020, while imports fell 30% compared to 2019. Poor agricultural production and the pandemic have exacerbated scarcity.Ĭuba’s GDP fell by 11% in 2020 – nearly one third of the total drop the island experienced during the “Special Period” between 19, following the collapse of the Soviet bloc.

Even while thousands of Cuban medical specialists have treated COVID-19 patients in over 40 countries, goods shortages on the island have made long, exhausting queues part of life’s daily grind, with Cubans rising at 4am to get in line. Measures to tackle the COVID-19 pandemic have demanded additional resources, while the economy was shut down and tourism revenues plummeted as borders were closed.

Incrementally since 2019, Cuba’s access to food and fuel has once again been severely impeded, export earnings slashed, and foreign investors scared off. In a final act of spite, on 12 January 2021, the Trump administration restored Cuba to the US list of state sponsors of terrorism, a move designed to obstruct any efforts by the new Biden administration to improve relations with the island. Even in the context of the pandemic, the pressure on Cuba intensified Washington imposed suffocating sanctions while the Miami-based opposition promoted political instability and civil strife. The Trump administration unleashed over 240 new measures to tighten the world’s longest and most punitive blockade, devised to cause misery and suffering among the Cuban people.

In January 2021, Donald Trump became the twelfth president of the United States to leave office without accomplishing regime change in Cuba, though it was not for want of trying. “After almost three decades of operating with a dual currency, the national peso and the convertible peso were unified on 1 January 2021” It is also being carried out in the midst of a global economic recession triggered by COVID-19. The endeavour is without precedent, both because the US blockade restricts Cuba’s access to external finances and revenues, and because the process is underscored by the state’s commitment to cushion the population from the trauma of restructuring. After almost three decades of operating with a dual currency, Cuba’s national peso (CUP) and its convertible peso (CUC) were unified as part of a broader process of “monetary ordering” that also involves major price adjustments, the elimination of “excessive subsidies and undue gratuities”, and significant changes in salaries, pensions, and social assistance benefits. The first of January 2021 was known as “Day Zero” in Cuba. But once the adjustment filters through the economy, and with the state’s promise that no one will be left behind, it could prove to be a vital step for Cuban development, writes our visiting fellow Helen Yaffe (University of Glasgow). With the pandemic raging and a global recession just beginning, unification of the national peso and the convertible peso may alarm Cubans.

Cuba exchange rates