Cuban government can’t pay saving accounts in dollars
For Cubans who have managed to buy an air conditioner, with the help of a relative abroad, their earnings in the private sector or their years-long savings, December could be the last month in which they can enjoy the cold air.
Accompanying a monetary unification that would eliminate the artificial hard currency CUC next year, the Cuban government raised electricity service rates five-fold. The news was announced together with a package of measures that include increasing the price of food, medicines and utilities, new taxes, and a wage reform.
Residential clients who paid 1,459 Cuban pesos ($60) per 1,000 kWh per month will see their bills soaring to 7,267 pesos ($302). That’s the equivalent of 3.5 times the monthly minimum wage, now set at 2,100 pesos ($87). On average, Miami FPL clients pay about
$100 for that same consumption.
In the past two years, the island’s cash-strapped government was forced to buy fuel in the international market due to the decrease in oil shipments from Venezuela and the Trump administration’s sanctions against shipping companies facilitating that trade.
The price hike comes at the end of a year in which the Cuban economy diminished by 11% due to the impact of the pandemic and U.S. sanctions, according to figures provided by Minister of Economy Alejandro Gil during a National Assembly session on Thursday.
Although the government also raised salaries and pensions, experts agree those gains will not compensate for the sudden increase in the commodity basket prices for food, medicine and basic services.
Cubans are shocked, leaving hundreds of critical comments in official media such as Cubadebate in recent days.
A user who identified himself as “a Cuban father” described the new electricity rates as “abusive.” Another user, identified as “Loly,” asked “how long” would Cubans have to live off the remittances sent by their relatives because they could not make ends meet.
“With our laughable salaries, even after the increase, we are subsidiz
ing the state,” wrote Karel, another reader of Cubadebate. “They cannot pay us fourth-world wages and pretend to charge us prices that are still high in the first [world].”
Many Cuban households use electric stoves that were sold by the government of the late Fidel Castro as part of his “energy revolution,” which makes them even more vulnerable to the increase. Many pensioners and those receiving social security assistance fear they will not be able to afford the new prices.
“I worked my whole life; I left early every morning; I came home at night. I studied and earned a master’s degree. It doesn’t weigh on me. But now I feel that those of us who
sacrifice everything for our country were not taken into account,” wrote another user with the acronym CDMF. “Now they have left me with a retirement that will not even be enough to pay for electricity. I have a retirement that does not reach the minimum wage in my country, and I cannot even sleep without heat. It’s sad.”
Several Cuban officials tried to defend the new electricity prices and deny that the price rise was part of “shock therapy,” a term frequently used by the Cuban government to criticize capitalist countries’ economic policies.
“What we are doing with the electricity tariff does not mean at all that we are seeking to reduce demand with the price increase” or that there is no fuel in the country, Gil said on state television. “If the price is raised to reduce consumption, it would be a shock policy that would make the service inaccessible to a large part of the population, which will not happen in our country.”
According to Gil, the government subsidizes part of the electricity generation expenses for those using up to 300 kWh, but the rate increases five-fold even for those consumers.
Marino Murillo, the former economy minister in charge of implementing economic reforms on the island, acknowledged that many people would not be able to pay those prices with their salaries.
“It seems to me that there is a cultural problem that will have to change, and that is that this rate should be paid with the family income and not exactly with the income of one person,” he said on a television show last week. But after widespread criticism from the population, Murillo said Thursday to legislators that “everything is being reviewed, all the opinions of the population. Everything is being studied, including the electricity tariff,” he added with a laugh.
The rise in prices is not the only December surprise that the elimination of the CUC, or Cuban convertible peso, has brought.
Cubans with savings accounts in that currency, which will cease to circulate legally as of January of next year, learned that their money is not backed in dollars or other currencies.
Under the new regulations, they can only transfer or take money out of the bank account if they convert it to Cuban pesos. But if they want to keep their savings in dollars or another international currency, their balance will be frozen. They will be granted a “certificate of deposit” that they can collect when the government decides.
The collection in dollars could take “years,” said the president of the Central Bank of Cuba, Marta Wilson González.
“Today those accounts are not backed” in foreign currency, González said in a television show this week. “It has not yet been established when that support will be available because we do not have the liquidity to say that it will be in this time frame or X years. It is not known.”
The official also said that despite the announcement that the Cuban peso would be equivalent to the dollar at a rate of 24 pesos to one dollar, the government will not sell dollars to the population for the time being. Yet, stores that sell food and other essential items exclusively in dollars will remain. Currently, only those who receive remittances from abroad in dollars can buy in those better-stocked stores.
Cubans traveling abroad can buy only $300 at the airport.