Friday, March 1, 2024

Gil set a date for intervention in Cuba’s informal exchange market

The Minister of Economy and Planning of Cuba, Alejandro Gil Fernández, said that in February, the regime’s plans to “reform” the exchange market will begin. Gil participated in the meeting of the Council of Ministers, where the leadership again defended the package and announced many “political processes” in the coming months, and that, in summary, the people want to swallow the designed measures.

According to Gil Fernández, in February, the government will “proceed with the presentation of proposals to change the size of the exchange market, the intervention of the informal sector, and the control of the exchange rate in the country, which includes “the determination of the exchange rate and the formation of prices, published on the site of the Presidency.

The minister said that “they are working hard on it because of its effect on productive promotion and motivation,” but the report did not specify what that was. “transformation” of the exchange market and the intervention of informal exchange.

Gil also did not give any indication about the official exchange rate that will govern. Currently, the US dollar value continues to rise in the informal market, where it is quoted at about 285 CUP, while the official exchange rate of the same currency remains at 120 Cuban pesos (CUP).

In a social network thread economist Pedro Monreal considers that the Cuban government includes intervention “in” the informal money market in the announced “projects,” but it is unclear whether he meant intervention “in” the market.

For Monreal, the language used “perhaps expresses confusion between intervention and exchange rate policy.”

“Intervention (an instrument) can be useful with fluctuations in the exchange rate and stabilize it, but it is ineffective for making permanent changes in rates resulting from an exchange rate policy that is inconsistent with the overall macroeconomic policy,” he warned.

In his speech to the Council of Ministers, Gil insisted that all the actions of the package “are linked to the Macroeconomic Stabilization Program” and that they are “necessary and cannot be postponed.”

For Monreal, “there is no macroeconomic stabilization in Cuba with a budget deficit equal to 18.5% of GDP projected for 2024.”.

The analyst said in another post  that “regarding the exchange rate, the problem is not to ‘control’ it but that it reflects the equilibrium rate.”

The Minister of Economy talked about an increase in the price of basic services, which is about “updating.”. Despite the danger in which most Cuban families live, he said that the prices are “delayed in time; there is no connection with costs” and “encourage waste.”

Monreal regretted that “it was not discussed that salaries and pensions fall behind and are cut from the cost of living for most workers and retirees.”

World Nation News Desk
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