Following measures introduced last November in Cuba to purge the domestic economy of the US dollar note (see FRFI 182) a new law, Resolution 92, reintroduces a degree of financial centralisation to Cuba not seen since the early days of the Revolution. HELEN YAFFE reports from Cuba.
Resolution 92 was announced on 29 December 2004, following a two-day session of the Cuban National Assembly in which President Fidel Castro reported on recent trade agreements signed between Cuba and China, and between Cuba and Venezuela. Castro also reported two other important economic projects; investments by a Canadian firm into nickel production and the recent discovery of significant oil reserves in Cuba. These trade accomplishments are vital to offset the effects of the ever-tightening US blockade and, along with the conversion to peso convertible in the domestic economy, they will significantly increase the foreign financial flows to Cuba.
In order to optimise these inflows and control foreign currency expenditure, Resolution 92 withdraws financial autonomy from Cuban entities. From 1 January and over the next few months the peso convertible incomes of all Cuban entities are being transferred into a single account in the Central Bank. The Bank controls how these resources are allocated and all financial transactions will have to be previously approved, before any service is received rather than at the point of payment. Incomes received as the Cuban dividend in mixed enterprises and other joint business will also be deposited in this account.
From 1 February the committee which is responsible for approving transactions in foreign currency will also approve operations in peso convertible. Cuban banks will not process any transaction in either national or foreign currency for Cuban entities which has not been previously authorised by the committee of approval.
The new regulation concludes: ‘The measures established by this resolution aim not only to guarantee a more efficient use of the resources in foreign currencies but also to provide more guarantees to the foreign commitments of Cuban entities.’
Resolution 92 is a rational response to the concrete conditions in which Cuba is forced to trade; a massively unequal international market and the illegal US blockade. Cuba trades with multinational corporations and other powerful financial institutions which have funds larger than some poor countries; by centralising its financial resources Cuba will be better able to respond to rapidly changing conditions and to have a stronger base from which to negotiate and make investments vital to the economic and social well-being of the Revolution. For example, the nickel industry is vitally important to Cuba, but prices in the international market fluctuate widely. With concentrated financial funds available when needed the Cuban government can respond intelligently to these fluctuating conditions.
FRFI 183 February / March 2005
