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NEWS
Posted on Fri, Dec. 31,
2004
CUBA
State seeks more control
Cuba further centralizes its economy as the central bank announces
that state firms can no longer handle foreign currency exchange.
BY ANITA SNOW
Associated Press
The Miami Herald
HAVANA - Moving to further centralize the communist state's control over
the economy, the government's central bank announced Thursday that
individual state companies would no longer handle foreign exchange.
The resolution spelling out the changes was published in the Communist
Party daily Granma.
Beginning Saturday, a single government account will be established for
foreign currency and for convertible Cuban pesos, an exchangeable
currency that trades 1-1 to the U.S. dollar and that is now used as the
primary form of legal tender on the island.
Under a series of steps to be introduced in the coming months, state
enterprises such as the food import firm Alimport, the Cubalse real
estate rental agency for foreigners and the technology company Cimex
will relinquish control over foreign exchange and convertible Cuban peso
accounts. Any profits from sales or services will have to be deposited
into that single government account.
The move will severely limit any remaining autonomy inside the various
state enterprises. It will also effectively turn back an earlier
government policy calling for state enterprises to move toward
self-financing by pouring earned foreign income back into their
operations.
Also, a state company that now wishes to buy any goods or services
available only in foreign currency will need special approval from a new
Foreign Exchange Approval Committee.
The announcement was the latest in a series of moves in recent months
aimed at reasserting government control over the economy in general, and
over foreign currency income in particular.
In late October, the government moved to eliminate U.S. dollars from
general circulation and replaced it with the convertible Cuban peso as
the primary form of legal tender for most products and services in the
Caribbean country.
Cuba's convertible currency, like that of many other smaller nations,
has no value outside the country. But Cuba relies heavily on imported
goods that must be purchased with dollars or other convertible foreign
currencies.
After the collapse of the Soviet Union, with which Cuba conducted barter
trade, Havana's need for hard currency grew.
Another local currency, known simply as the Cuban peso, is used
primarily for heavily subsidized state goods and services and trades at
around 26 to the U.S. dollar or Cuban convertible peso.
The currency switch in October appeared aimed at eliminating Cuba's
dependence on the money of its No. 1 enemy -- the United States -- for
hard currency reserves, building up new sources of convertible foreign
funds and reasserting centralized control over the economy.
The dollar is not banned and Cubans can still hold the currency,
although it is not of use to buy goods or services until changed into
the convertible peso with a 10 percent surcharge.
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