Cuba allows dollar deposits as the island’s economy crumbles

FILE PHOTO: A vendor shows Cuban pesos notes in a public market in Havana, Cuba, June 12, 2021. REUTERS/Alexandre Meneghini

The Cuban government ended a two-year ban on financial institutions’ accepting dollars this week as the island faces a deepening economic crisis, with mounting shortages of food, medicines and fuel reaching critical levels in recent weeks. The reversal is considered necessary to maximize the benefits of a post-pandemic recovery in tourism, France24 reports.

The move comes after the government ended its parallel currencies system, phasing out a convertible peso pegged to the dollar and leaving only the weaker regular peso. However, the currency has continued falling and its cratering value only exacerbates challenges for Cuban consumers who are facing runaway inflation and critical shortages of basic goods.

  • US and Cuba to hold fresh round of migration talks this week. (Reuters)

Cuban economists argue that the current challenges, including months of blackoutsdue to failing electricity infrastructure, are structural and likely to continue as thousands flee the crisis.

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