Money and paying for things in Cuba
More over 2 years since Cuba changed its dual currency system. The CUC (Cuban Convertible Peso) has now gone and the country now has a single-currency economy.
For the past 20 years Cubans have been used to living and working with two currencies, the CUP ( Cuban Peso ) and the CUC ( Cuban Convertible Peso ). The CUP was the everyday currency used to pay wages, utilities and basic foodstuffs. The CUC ( pegged at CUC1:USD1) was the currency used for everything else ( buying imported food, luxury goods, homes, meals and accommodation ).
Today, there is only the CUP, which you would think would make life easier – Or, maybe not!!!!
Like the rest of the world, Cuba is moving towards a digital economy and your bank cards may come in handy in certain places, but like many things in Cuba there’s still a way to go before the country is truly digital.
For more information, do a Google search on Cuban official money advice where you’ll learn that the CUP ( Cuban Peso ) is the only legal currency in the country.
To make the most of your trip (and your money) a little background knowledge can go a long way! Money has never been straightforward on this island. Anyone travelling to Cuba should get a basic understanding of what’s going on money-wise and rethink what spending money to bring.
Some thoughts on money matters in Cuba over the past 30 years, and why EUROS are king!
THE SOVIET ERA
Between 1961-1991, Cuba’s Revolutionary economy was propped up by good old Soviet oil, Soviet investment and subsidised imports from the Eastern Bloc countries. The Cuban Peso ( CUP ) remained stable from the 1960’s and, although Cubans weren’t wealthy, the average wage covered everyday expenses such as rent, utilities, food, clothing and going out.
THE DOLLAR RULES 1993-2004
I first went to Cuba as it emerged from the economic free-fall caused by the collapse of the Soviet Union in 1991. The only money I could use was the USD. Weird. Why? Because when the Soviet Union withdrew, Cuba lost most of its business partners and the economy collapsed. The CUP became worthless and the USD became the underground currency used to purchase anything of value. Such was the strength of the USD in Cuba, that the government eventually made it legal tender and – from 1993-2004 – it became the most common currency to purchase goods ( both in government stores and small privately owned businesses ).
CUC 2004- 2021
The Legalising of the USD must have caused a few headaches for Fidel and his Revolutionary Government. But thanks to good old pragmatism and the growth of tourism, Cuba slowly emerged from the worst economic crisis in decades. The receipt of USD meant Cuba could start to reinvest in the future of the country.
To further the acceptance of the USD in the latter years of the 20th Century, a new currency was introduced in Cuba, the CUC (Cuban Convertible Currency ) which was, effectively, a USD dressed in tropical Cuban clothing. Pegged at USD1:CUC1 this currency replaced the USD, which was withdrawn from circulation in 2004.
Everything was bought with CUC and although originally derided for being a “fake” currency, its stability meant that it could even be used abroad (Panama, for example, accepted the CUC for purchases in the free zone).
Even though the CUC was stable, its existence created a complicated double economy. For nearly 17 years the exchange rate remained CUC1:CUP24. The problem was that, while the Cuban population was paid in CUP (an average monthly wage of less than CUP1000) most goods were only available for sale in CUC.
You can see how this duel economy started to unravel and cause problems for all.
2021 – THE ECONOMIC REFORM
For many years, everyone in Cuba talked about the need for economic reform, the aim of ending the dual currency situation.
There’s the right time do make big economic changes and there’s the rest of the time. For reasons which few will ever understand, the Cuban Government eliminated the CUC in the middle of the Covid-19 pandemic.
Cuba’s economy relies heavily on tourism, a source of much-needed foreign income and investment. The effects of the pandemic and the resultant economic crisis due to the lack of tourism have been exasperated by withdrawing the CUC, which began on 1st January 2021.
Now that the CUC’s withdrawal is complete, the CUP is, once again, the only official Cuban currency in circulation.
At the same time as the CUC was withdrawn, the Cuban Government started to digitalise the economy by introducing bank cards to the Cuban population and by creating telephone apps to allow for digital payments of utilities and other services. For the most part, people are happy with the modernisation of their economy and the easier access to wi-fi which has made it possible.
And so the tables turn – The Cuban Convertible Peso ( CUC ) now has vanished but the need for foreign currency has not. History has a funny way of repeating and recently a new digital currency was introduced. It’s called MLC (Moneda Libremente Convertible aka the USD in digital clothing! ) and can be used to buy goods in stores using the newly issued bank cards Cubans now use.
But there’s always a twist!. While Cuban salaries are paid in CUP (which can be used to pay for utilities and basic foods), they can’t really be used for anything else.
The stuff people really need (imported food, medication, toiletries, air conditioning units, electrical goods, building materials…pretty much anything imported) are only available to buy in MLC, a currency which Cubans must upload to their bank cards by buying expensive foreign currencies such as the USD, EUR or GBP, to name a few. Which most Cubans can’t access unless they have friends or family abroad who can send it to them….You can now see the problem?