In Cuba, peso makes a comeback, pleasing customers

*Peso-priced retail outlets opening across island

*Seen as first step toward ending dual currency

*Santiago de Cuba apparent pilot project

By Marc Frank

SANTIAGO DE CUBA, Feb 1 (BestGrowthStock) – Retail outlets selling
everything in Cuban pesos are popping up across the country in
what may be the government’s first steps toward phasing out its
unpopular two-currency system.

The establishments opened the past year in a reversal of
two decades of national policy that priced most goods and
services in a dollar-linked convertible peso widely known by
its acronym, the CUC.

“They have opened restaurants, pizzerias, cafeterias and
pastry shops and set up areas across the city where they sell
sandwiches, snacks and soda,” said retiree Pedro de la Fuente
from Guantanamo, the capital city of Cuba’s easternmost
province.

“The population has welcomed this because before these
things were available only in convertible pesos,” he said.

The change appears to be part of President Raul Castro’s
plan to make more goods and services available in pesos in a
gradual transition away from the two-currency system, which he
has pledged to eliminate.

Since taking over from his ailing brother Fidel two years
ago, Raul Castro has pledged to make daily life easier in the
communist state, where the government tightly regulates almost
all economic activity.

He has taken steps to reform agriculture to increase food
production, liberalize the sale of computers, cell phones and
domestic appliances and free up the official media to criticize
bureaucratic mismanagement.

Cuba adopted the dollar as its second currency to prop up
its economy, which spiraled into a deep depression after the
Soviet Union, the island’s benefactor for 30 years, collapsed
in 1991.

The dollar was eventually replaced by the CUC, which is
pegged at a value of US$1.08 to one.

Cubans have complained mightily about the two-tier system,
saying it makes too many things unaffordable for them unless
they receive dollars from relatives living abroad.

The average Cuban salary is 440 pesos a month, the
equivalent of 18 CUCs at the current exchange rate of 24 pesos
to one.

SANTIAGO THE PILOT PROJECT

The epicenter of change is Santiago de Cuba, the island’s
second largest city, where far more peso outlets have opened
than in other cities.

“There is a special plan, where the party and government
allocated Santiago a budget to remodel dozens of establishments
and open new ones,” a Communist Party cadre and administrator
of various eating places said, asking her name not be used
because she was not authorized to talk with foreign
journalists.

“The idea is for the population to feel good, to have the
services they deserve, to be able to sit down in any
restaurant, cafeteria or what have you and pay in pesos,” she
said.

For the 50 percent of the population with some dollar
income from family remittances, state bonuses, tips or other
sources, the prices are often a steal, but they are only
occasionally accessible to those not so fortunate.

“At least I can go out to eat a few times a month in the
money I’m paid with,” said Carmela, a professor of nursing in
the central city of Camaguey who earns 600 pesos per month.

An informal survey in Santiago de Cuba found that at Ideal
supermarkets, much of what one finds in the convertible peso
markets can be had for a price equivalent to up to 20 pesos to
a convertible peso, still very expensive but a bit more
affordable than the 24-to-one official exchange rate.

Local fish stores sold a kilogram (2.2 pounds) of shelled
oysters for 60 pesos, lobster meat for 50 pesos, crab for 15
pesos and salted fish for 50 pesos.

At the restaurant Las Americas, a meal of pork, rice and
beans, salad and a local beer or soda, cost around 35 pesos and
in the evening the place was packed.

The pizzeria down the street sold a large pie and beverage
for 20 pesos to a full house, adding on up to 10 pesos for
lobster, chicken, sausage or shrimp topping.

A few doors away a fish restaurant did a brisk business
offering a variety of grilled and fried dishes for between 30
pesos and 50 pesos.

The peso establishments were well lit, clean and air
conditioned, luxuries reserved for CUC-based eateries since the
1990s.

That was not true everywhere — in the eastern city of
Holguin, for example, some remain dark, dirty and hot.

The government has said little about the project or how
fast it will move, but Raul Castro has told Cubans it will take
several years to return to one currency.

Stock Analysis
(Editing by Jeff Franks and David Storey)

In Cuba, peso makes a comeback, pleasing customers