The state-owned real estate company, Cubija, which oversees property rentals to foreign individuals and businesses in Cuba, has rolled out a policy requiring its foreign tenants to pay rent in U.S. dollars (USD) instead of Cuban pesos (CUP). This policy is set to take effect on July 1st and applies to all non-Cuban tenants, both corporate and individual, as reported by EFE.
This shift represents a significant disruption for international companies, many of which have been receiving payments—often from the state itself—in CUP, a currency that is increasingly worthless both within and outside Cuba. The transition has sparked concern among affected businesses due to the substantial increase in rental costs, especially given the disparity between the official exchange rate (1 USD = 24 CUP) and the black market rate (approximately 375 CUP).
The Cuban government justifies this policy, sanctioned by the Ministry of Economy and Planning's Resolution 20/2025, as a means for certain state enterprises to tap into a portion of the foreign currency they generate. This marks another step towards the dollarization of Cuba's economy across various sectors. Cubija is part of PALCO S.A., which operates under the control of the Revolutionary Armed Forces (FAR) through the GAESA conglomerate.
Foreign Enterprises Face Economic Challenges
According to several communications from Cubija to its non-Cuban tenants, to which EFE had access, the official exchange rate of 1 USD = 24 CUP will be applied, affecting legal entities. This adjustment could multiply contract costs up to fifteen times for many renters when compared to the real exchange rate on the informal market.
This new framework has been met with dissatisfaction from foreign companies and individuals, some of whom have formally expressed their disapproval to the real estate firm. The news agency reports that a few have even refused to comply with what they view as a sudden and detrimental change to their operations on the island.
A Landscape of Financial Constraints and Scarcity
Cubija defended the decision by explaining that the Ministry of Economy and Planning had approved a "foreign currency financing scheme" for PALCO group companies on March 31st. This is part of a broader governmental effort to create mechanisms allowing certain entities to access a percentage of the foreign currency they generate, in a nation where most bank accounts lack cash backing.
Cuba is enduring a severe financial crisis, with its banking system imposing strict limits on cash withdrawals in both pesos and foreign currencies. For months, banks have restricted CUP cash withdrawals, and access to foreign currencies is nearly non-existent, according to foreign companies.
Growing Discontent Among Foreign Companies
Foreign businesses in Cuba continue to face challenges. In April, the Cuban government informed international companies that they could no longer repatriate foreign currency from their accounts. As a concession, they were offered to open new accounts with funds deposited from abroad, with the promise of full availability of those resources. However, many of these accounts have not performed as expected, further eroding investor confidence.
Emergency Measures Amid a Collapsing Economy
Faced with an urgent need for foreign currency, the Cuban government has enacted several emergency measures, such as the expansion of stores operating exclusively in dollars and charging for certain services and transactions in foreign currency. This latest development is part of a longstanding crisis exacerbated by the coronavirus pandemic, a series of failed economic reforms, and the tightening of U.S. sanctions.
The Cuban economy, with declining national production, relies heavily on imports to meet about 80% of domestic consumption, particularly for food and fuel.
Foreign Currency Policies Impact on Cuban Economy
Why is Cubija requiring rent payments in U.S. dollars?
Cubija is requiring rent payments in U.S. dollars as part of a policy authorized by the Ministry of Economy and Planning, aimed at allowing certain state enterprises to access a portion of the foreign currency they generate. This is seen as a step towards dollarization in Cuba.
How does this policy affect foreign companies in Cuba?
The policy significantly increases rental costs for foreign companies, as they must now pay in U.S. dollars instead of the less valuable Cuban pesos. This change is particularly burdensome due to the gap between the official and informal exchange rates.
What challenges are foreign companies facing in Cuba?
Foreign companies in Cuba are facing challenges such as restrictions on repatriating foreign currency, increased costs due to exchange rate policies, and difficulties with accessing funds in new accounts opened with deposits from abroad.