New Year & New Economic Woes for Cubans as Prices Surge

Havana, Jan 6 (AFP/APP): Raisa Lemus had to return home to fetch extra money to finish her shopping, Arturo Sobrado was angered by the “abusive” bus fare hike and Norma Pousada was left bemused that shops no longer accepted her money.

For Cubans, the new year has begun with a steep, painful rise in prices due to a complex economic reform launched on January 1 by the government that also included an increase in salaries. The two cohabiting currencies in circulation for a quarter of a century are being fused into one: and one is worth 24 times less than the other. To soften the blow, the government announced a bumper five-fold hike in the minimum wage. But basic goods such as food and electricity have also seen a sharp rise in prices since the Christmas holidays.

“I’m feeling the pinch,” said Lemus, a 39-year-old singer who went out to buy her monthly groceries in a central neighborhood of the capital Havana, only to return home with less than half of what she was expecting. “I didn’t have the money, the exchange rate is brutal,” she said, adding that she had to leave her 18-month-old son at home while she returned to the store with more money.

Her salary has risen to 3,000 pesos ($125) a month, but she says it’s not enough. “Before I spent 60-odd pesos, it was very little, and now with a little more than half the products I need, I paid more than 300 pesos,” she said. “I’m missing oil, coffee, toiletries, and beans. Overall it’s going to cost me 1,000 pesos.”

It’s abusive

Although the government has set a six-month period to phase out the convertible peso — which is pinned to the dollar and was introduced in 1994 to replace the US currency that was commonly used alongside the regular peso — many stores have put up signs saying they are not accepting it any more. “We don’t understand this and that’s why it’s like this in front of the bank,” said Pousada, a 70-year-old pensioner as she stood in one of the many queues outside banks.

She also expressed her concern that the risk of catching the coronavirus was greater while queueing. Some people started lining up as early as 5:00 am to exchange their convertible pesos for regular ones. Pousada is angry with Marino Murillo, the ruling Communist Party member responsible for the economic reforms, and says things haven’t happened the way he claimed they would. The reforms have left people worried and angry.

“Two pesos is abusive,” complained Sobrado, 71, as he watched a bus pass with a message on its side announcing the new ticket price. “I’m really not happy,” he added. Less than a week ago that same ticket cost 40 cents.

According to Ricardo Torres, an economist at the University of Havana, one of the major problems is that salaries haven’t increased as much as prices. Bread, for example, has soared 20 times from five cents to one peso. Torres believes authorities have “underestimated the calculation” of the cost of the basic needs of a Cuban family, something which will particularly affect the large informal sector.

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