The Minister of Economy and Planning, Joaquín Alonso Vázquez, recently detailed on state television the new currency management, control, and allocation system approved by Decree-Law 113 of the State Council. Although he claims the measure does not aim to "dollarize the economy," this narrative is all too familiar to the Cuban populace.
The decree's content closely mirrors the policies of former minister Alejandro Gil Fernández, who was recently tried for corruption and espionage. Both frameworks embrace the same ideological discourse, centralized approach, and perpetuate inequality and state control over foreign currency.
Echoes of Centralized Control
This article highlights, step by step, how the new Decree-Law 113 shares the same centralized currency control logic as the Tarea Ordenamiento, focusing on access segmentation and prioritizing foreign currency collection and rationing, albeit now on an overtly multi-currency basis.
The approach essentially recycles the objectives and methods of the Ordenamiento, but adapts them to an already de facto "re-dollarized" economy.
Declared Objectives Continue
Both frameworks are described as "technical" measures necessary to modernize the economic model, enhance efficiency, and organize the monetary and financial system. The Tarea Ordenamiento and the new decree are both justified as necessary steps to "strengthen the national economy" and better utilize external resources, all while upholding the centrality of the Cuban peso.
State Management and Currency Rationing
Under the Tarea Ordenamiento, the state retained the decision-making role over who had access to foreign currency through controls on the official exchange market, the MLC channel, and the allocation of inputs and imports. Decree-Law 113 upholds this principle but formalizes it, establishing a currency management and allocation system where the MEP and BCC determine the legitimate sources of currency, how it can be used, and who receives ACAD or other permissions to operate in hard currency.
Economic Circuit Segmentation
The Tarea Ordenamiento, despite its proclamation of unification, ended up coexisting with a parallel MLC circuit to capture remittances and sustain imports, creating a divide between those with access to foreign currency and those operating solely in CUP. The new decree consolidates this duality, explicitly recognizing two circuits, one in CUP and one in foreign currencies, and articulates specific rules for actors legally transacting in foreign currency within the country.
Partial Currency Capture and Retention
The Ordenamiento design sought to channel foreign currency into state-controlled channels (MLC, official exchange rate, banks), reducing the scope of the informal market. The new framework continues this revenue-generating logic by creating "legal" avenues for currency access, while simultaneously enforcing mandatory retentions and strict control of accounts and transactions in foreign currencies.
Persistent Ideological Narrative
Both implementations stress that monetary measures do not equate to abandoning socialism or an intention to "dollarize" the economy, but rather serve as temporary instruments to protect national interests and organize the system. The Ordenamiento and the current decree are accompanied by a narrative of "temporality" and a promise to return to the centrality of the CUP, without clear timelines or concrete mechanisms to reverse currency dependency.
Key Differences Between Decree-Law 113 and Tarea Ordenamiento
While both the Tarea Ordenamiento and Decree-Law 113 stem from the same issue (chronic foreign currency shortages and monetary distortions), they are fundamentally different in approach. The Ordenamiento aimed to recentralize everything in the CUP and "eliminate dollarization," whereas Decree-Law 113 accepts and legalizes selective partial dollarization for specific actors. Below are the primary differences across key areas.
1. Central Objective
- Tarea Ordenamiento: Sought monetary and exchange unification by eliminating the CUC and establishing a single rate of 24 CUP per dollar, with the CUP as the sole internal legal tender.
- Decree-Law 113: Does not aim for unification but manages and rations foreign currency scarcity; establishes a legal framework for internal transactions in foreign currencies (dollar, euro, etc.) and defines who can use them and how.
2. Monetary Architecture Resulting
- Tarea Ordenamiento: Designed a "single currency" scheme formally (CUP), though MLC circuits and a strong informal market persisted in practice.
- Decree-Law 113: Explicitly consolidates a multi-currency system with two circuits: one in CUP and another in foreign currency for authorized actors; no longer an "error" of the model, but its design.
3. Impact on Population
- Tarea Ordenamiento: Directly affected the entire population's wages, pensions, tariffs, subsidies, and regulated prices, redesigning income and expenses in CUP.
- Decree-Law 113: Focuses on economic actors (state, foreign, and private enterprises, Mipymes, TCP, local projects, foreign investment), leaving the average citizen in CUP unless they engage in these circuits or receive foreign currency.
4. Dollarization Treatment
- Tarea Ordenamiento: Proclaimed the elimination of internal dollarization, moving all formal transactions to Cuban pesos and presenting MLC operations as exceptional and "temporary."
- Decree-Law 113: Recognizes that the economy is partially dollarized and creates the legal framework for this coexistence; speaking of a "temporary period" is more a political statement than a concrete operational goal.
5. Instruments and Mechanisms
- Tarea Ordenamiento: Utilized tools such as a single exchange rate, CUC elimination, wage and pension reform, subsidy withdrawal, and relative price restructuring.
- Decree-Law 113: Introduces specific financial and administrative instruments: BCC-regulated foreign currency accounts, hard currency self-financing schemes, Foreign Currency Access Capacity Assignments (ACAD), and detailed rules for foreign currency collections and payments.
6. Logic of Currency Access
- Tarea Ordenamiento: Emphasized a "signal" exchange rate (24x1) and channeling currency through the banking system and MLC channel, but lacked a clear regime of who could use it internally.
- Decree-Law 113: Precisely defines which sectors and operations can use currency, what are the "legitimate" sources of access (exports, external e-commerce, ZEDM, donations, financing, official market purchases, etc.), and under what conditions part of those funds is assigned or retained.
7. Relationship with the Exchange Market
- Tarea Ordenamiento: Linked the reform to the creation of a formal exchange market under the 24 CUP type, which was overwhelmed by inflation and the informal market.
- Decree-Law 113: Presented as part of the "Macroeconomic Stabilization Program" and the relaunch of the exchange market, preparing for future transformations in the exchange rate and the relationship between CUP and currency.
8. Role of the Citizen and the CUP
- Tarea Ordenamiento: Centered on the citizen (wages, basket, subsidies), although in practice it eroded the purchasing power of CUP incomes.
- Decree-Law 113: Centers on the State and economic actors capable of generating or managing foreign currency; the "common" citizen is on the periphery, depending on whether they can connect to these hard currency flows.
Understanding Decree-Law 113 in Cuba
What is the primary aim of Decree-Law 113?
Decree-Law 113 aims to manage and ration the scarcity of foreign currency in Cuba, creating a legal framework for internal transactions in foreign currencies and defining who can use them.
How does Decree-Law 113 affect the average Cuban citizen?
The decree primarily focuses on economic actors, leaving the average citizen in CUP unless they participate in specific circuits or receive foreign currency, placing them on the periphery of the economic changes.