On Thursday, the Minister of Economy and Planning, Joaquín Alonso Vázquez, elaborated on the newly implemented system for managing, controlling, and allocating foreign currency in Cuba during the state-run Mesa Redonda program.
This system, sanctioned under Decree-Law 113 by the Council of State, is governed by resolutions from both the Ministry and the Central Bank of Cuba (BCC).
Alonso Vázquez emphasized that the aim is not to "dollarize the economy." Instead, the intention behind the new framework is to structure currency operations, enhance control, and regulate legitimate access to foreign exchange within the nation.
The minister reiterated, "We don't want foreign currency at any cost."
Legitimate Sources of Foreign Currency for the Regime
Alonso Vázquez outlined the authorized means to obtain foreign currency under the new system, which include:
- Revenue from exports.
- Electronic commerce with payments originating from abroad.
- External credits and financing.
- Pre-financing of projects.
- Donations from abroad, such as recent aid for Hurricane Melissa victims.
- Funding from international organizations.
- Operations in the Mariel Special Development Zone (ZEDM).
- Electronic payments among Cuban economic actors.
- Sales to foreign exchange commercial entities.
- Centralized allocations by the government.
- Other sources defined by competent authorities, allowing flexibility in the regulations.
The minister assured that Decree-Law 113 aims to boost foreign currency income via exports and foreign investment, increase efficiency in currency management, and control national economic operations through freely convertible currency accounts (MLC) and Currency Access Capacity Allocations (ACAD).
This new approach also seeks to clarify authorized internal transactions in foreign currency and define legitimate access sources, a task that had seemingly slipped during the previous minister's tenure.
Who Is Affected by the New Regulation?
Understanding who is impacted by this new regulation is of significant interest to the public. According to the minister, "the new system does not discriminate based on property type and includes both state and private entities, as well as individuals."
The authorized actors are:
- Cuban legal entities: state companies, micro, small, and medium enterprises (MSMEs), agricultural and non-agricultural cooperatives, and any formally established entity.
- Individuals engaged in economic activities, such as self-employed workers, farmers, artists, and others.
- Foreign or mixed legal entities: foreign capital companies, international economic association contracts, diplomatic bodies, and operators in the Mariel Special Development Zone (ZEDM).
- Local Development Projects.
- International Cooperation Projects.
The new scheme ostensibly aims to make the flow of foreign currency within the country more transparent and guarantee controlled, efficient access to these resources. However, it mirrors the model promoted by former minister Alejandro Gil Fernández, who was recently tried for corruption and espionage.
Gil had advocated a similar "centralized allocation" system for foreign currency, denying that the regime's measures were promoting the "dollarization of the Cuban economy." His speeches often referenced purchases of rice ships by the Cuban government, asserting that the regime's economic measures, lacking popular support, were "painful" for its leaders.
Additional Aspects of Decree-Law 113
The new legal framework aims to reinforce state control over currency circulation, while also creating formal spaces for the private sector and local actors, under the direct supervision of the Central Bank and the Ministry of Economy and Planning.
The Central Bank of Cuba will determine who is eligible to operate in foreign currency, including state companies, MSMEs, cooperatives, self-employed workers, farmers, artists, and foreign entities, but not citizens without economic activity.
These entities can open foreign currency accounts to import, transfer funds, or pay for services, provided they obtain a license from the BCC.
The Ministry of Economy will implement the Currency Access Capacity Allocation (ACAD), authorizing state companies to purchase foreign currency with pesos, but with limitations: it is non-transferable and expires in 30 days.
Exporting companies may retain up to 80% of their hard currency earnings, with the remainder directed to state funds.
The government claims it seeks to "reorganize and make the economy more transparent" and to promote exports. However, it acknowledges that partial dollarization is unavoidable and that, for now, the general population will continue to lack direct access to foreign currency or see immediate improvements in purchasing power.
Understanding Decree-Law 113's Impact on Cuba's Economy
What does Decree-Law 113 aim to accomplish?
Decree-Law 113 seeks to structure foreign currency operations, enhance control, and regulate legitimate access to foreign exchange within Cuba, while boosting incomes via exports and foreign investments.
Who is authorized to operate in foreign currency under the new system?
State companies, MSMEs, cooperatives, self-employed workers, farmers, artists, and foreign entities, excluding citizens without economic activity, can operate in foreign currency with a license from the Central Bank.
How does the new system affect ordinary Cubans?
The general population will continue to lack direct access to foreign currency, and there won't be immediate improvements in their purchasing power despite the new system.