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The monetary reform requires the elimination of the parallel circulation of the Cuban peso and the Cuban convertible peso pegged to the dollar.
Since the New Year, a large-scale currency reform has begun in Cuba: a single monetary currency will be introduced into the country pegged to a single exchange rate, Reuters reports.
As the agency points out, since 1994, two currencies were officially in circulation in Cuba: the Cuban peso and the Cuban convertible peso. The rate of the second currency was pegged to the US dollar (last year, the US currency was withdrawn from circulation in response to Washington sanctions).
The convertible peso is the equivalent of the US dollar. The officials received part of their salaries in convertible pesos. The peso / Cuban dollar rate, according to the country’s central bank, is 24: 1. After the reform, the convertible peso will be withdrawn from circulation.
According to Reuters, due to the reform, the prices of goods and services in Cuba are expected to rise. In addition, pensions and salaries in the public sector will be increased fivefold, where around 66% of the employed population works. This is believed to help avoid a sharp devaluation and reduce subsidies, as well as contributing to the transparency of the economy.
As a result of the coronavirus pandemic and US sanctions in 2020, a drop GDP Cuba represented 11%. Currency reform could speed up this process, the agency said.
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