Madrid/The Cuban Government will for the first time allow private individuals to have accounts in foreign currency and do business with them, a measure long demanded by this sector but which will be limited by the amount they must deliver to the State. The rule establishes a clear difference between foreign investors and national companies, on which an 80% withholding coefficient is imposed – the amount of foreign currency income that can be kept, while the rest is sold to the Central Bank at the official exchange rate -, compared to 100% for the former.
The decision is part of a legislative package published this Thursday in the Official Gazette through which Cuba gives shape to a dollarization that it once again considers partial, “until the conditions of the economy allow it and the Cuban peso is resumed as the only legal tender in the country.” In total there are four regulations – a decree law and three resolutions – that establish “a new mechanism for the management, control and allocation of foreign currency, with the aim of increasing income in foreign currency and achieving a more efficient use of the same.”
The decision is part of a legislative package published this Thursday in the Official Gazette through which Cuba gives shape to a dollarization that it once again considers partial
The measures impact all economic actors regardless of whether they are state, private or cooperative and foreign or national, but establish some differences between them. One of the most important is the one already mentioned regarding the retention coefficient. For state companies there are particularities, since many of them already had approved financing schemes in foreign currency, but in the case of private companies there is a particularity.
The 80% will be applied to income from exports, electronic commerce with payments from abroad, sales of goods and services to users and concessionaires of the Mariel Special Development Zone (ZEDM), foreign investment modalities and entities authorized to trade in foreign currency. For the rest of the cases listed in article 5 of the regulation (dedicated to possible sources of legal foreign currency), they may keep 100%.
According to the Government, the retained currencies can be sold in the exchange market or used for authorized payments, promoting productive chains and import substitution.
The text provides a solution to the demands of private parties, who had been demanding for years a legal foreign exchange market with which to operate: its absence prevented them from carrying out import operations of the inputs that are so scarce in Cuba in a legal manner, promoting the parallel market and leaving them exposed to any inspection leaving them without a license, among other penalties. Furthermore, if the measure is successful, the State will be able to regain access to foreign currency that was operating illegally and, therefore, escaping its control. This, in turn, hindered the payments that the Government must make to finance its own expenses and pay its foreign suppliers, among other things the essential fuel without which the economy cannot advance.
The regulations also regulate bank accounts in foreign currency, authorizing private individuals for the first time to have them, which in turn allows them to pay for imports without having to exchange currency. This also gives way to payments between different economic actors, facilitating the much-mentioned “chains”.
This also gives way to payments between different economic actors, facilitating the much-mentioned “chains”.
Another element established by the legislation is the so-called ACAD, a purchase authorization that the Government, through the Minister of Economy and Planning, will grant to companies to purchase foreign currency from the Central Bank. To obtain it, it is essential that the applicant have the national currency available. The permit is also non-transferable.
National transactions – internal, as defined by the resolution – will preferably be made in pesos, except when they occur between operators in the ZEDM, between wholesalers and stores (retailers) in foreign currency and others that may exceptionally be approved. Exporters and those who operate in electronic commerce can pay their national suppliers in foreign currency as long as it is by mutual agreement, a novelty that will make it easier for currency to flow without intermediaries.
As for the rest of the economic actors, the law indicates that foreign investors collect and pay in foreign currency and can operate domestically with both currencies. Private businesses must sell, as a rule, in pesos, but if the client pays in foreign currency, the businessman can receive payment in that same currency – although he can choose to convert it into pesos. Agricultural producers, for their part, will receive the income in their foreign currency accounts if they are recognized as exporters or import substitutes.
