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Cuba Studying Potential Use of Cryptocurrency to Boost its Economy

Cuba's inefficient state-run economy is facing a crisis due to a sharp decline in Venezuelan aid, lower exports

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FILE - Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies, Feb. 13, 2018. Switzerland's government wants to look into the feasibility of launching its own state-backed cryptocurrency. VOA

Cuba’s Communist government said on Tuesday it was studying the potential use of cryptocurrency as part of a series of measures to boost its economy amid a deepening crisis exacerbated by U.S. sanctions.

Cryptocurrency, which allows financial operations to be carried out anonymously, has been used in the past to get around capital controls. Cuba’s top ally Venezuela introduced a cryptocurrency last year aiming to avoid U.S. sanctions and weather hyperinflation, although it never properly got off the ground.

Cuba’s inefficient state-run economy is facing a crisis due to a sharp decline in Venezuelan aid, lower exports and the tightening of the decades-old U.S. trade embargo under President Donald Trump.

The new measures, announced on a roundtable on state-run TV by President Miguel Diaz-Canel and his government, will raise income for around a quarter of the population and deepen market reforms of one of the world’s last Soviet-style command economy’s started by the island nation’s previous president, Raul Castro.

Cuba, Cruptocurrency, Economy
Cuba’s Communist government said on Tuesday it was studying the potential use of cryptocurrency. Pixabay

The aim is to raise national production and demand in order to boost growth as U.S. sanctions target tourism and foreign investment. Diaz-Canel, working to establish his legitimacy after assuming the presidency in April 2018, said the government was working on the details of the implementation.

“We are studying the potential use of cryptocurrency … in our national and international commercial transactions, and we are working on that together with academics,” Economy Minister Alejandro Gil Fernandez said.

The most popular measure in the new package will likely be the hikes in some pensions and wages for workers in public administration, social services and state-run media, bringing the medium monthly wage in those sectors up to the equivalent of $44.5 from around $25 previously.

Many Cubans say the measure still will not be sufficient to breach the gap between salaries and the cost of living.

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Nonetheless it should boost purchasing power, as long as inflation is kept in check.

“It’s not ideal, but it’s an advance,” said Pavel Joaquin Hernandez, 46, a general practitioner who will go from earning the equivalent of around $40 per month to $64.

Cuban economist Omar Everleny said the raise was crucial given how demotivated workers were, with many emigrating.

“For the first time, (the government) is linking the fact that everything can be achieved if workers are motivated,” he said.

Cuba, Cruptocurrency, Economy
Cryptocurrency, which allows financial operations to be carried out anonymously, has been used in the past. Pixabay

Gil Fernandez said the government was also broadening a series of measures aimed at decentralizing and thus improving state-run company performance and stimulating local production, substitution of imports and increasing exports. For example, he said, financial service companies would be established to provide cash in the face of opportunity more quickly than the centralized planning system.

The government would also expand a system allowing some companies to keep a percentage of the hard currency they earn in order to reinvest it immediately rather than have to apply for credit.

State companies, agricultural entities and other economic actors that supply a growing number of firms in the Mariel Special Economic Zone, a project resembling China’s first capitalist oasis, would receive a percentage of sales in hard currency, Gil Fernandez said.

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The government was also studying how to allow the growing number of small private businesses to export through the state-run businesses, he said. (VOA)

Next Story

India: Government Aims to Increase Present $2.7 Trillion Economy to $5 Trillion by 2025

The middle class literally wailed when the petrol prices shot up by Rs 2.50 per litre, diesel prices hiked up by Rs 2.30 per litre

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India, Government, Economy
Instead of making US dollar a bench mark of aspirational currency, why not work on making Indian Rupee stronger? PIxabay

The moment after the “bahikhaata” Union Budget was presented on Friday, people took to social media platforms that erupted with angry and perplexed reactions.

“Your folder is sanskaari, symbolising ‘departure from slavery of western thought’, but your aspirations are 3 trillion ‘US DOLLARS’ economy, huh hypocrite!” tweeted a user.

Finance Minister Nirmala Sitharaman announced that the government aims to increase the present $2.7 trillion economy to $5 trillion by 2025.

“Instead of making US dollar a bench mark of aspirational currency, why not work on making Indian Rupee stronger?” another user posted.

India, Government, Economy
The moment after the “bahikhaata” Union Budget was presented on Friday, people took to social media platforms. Pixabay

Another social media user shared the lines from an old song: “Achcha sila diya tune mere pyar ka”.

The middle class literally wailed when the petrol prices shot up by Rs 2.50 per litre, diesel prices hiked up by Rs 2.30 per litre just hours after the union budget was presented.

“This has been one of the poorest budgets for common honest tax payer and middle class. You are bound to lose many supporters,” a user wrote in reply to former finance minister Arun Jaitley’s tweet on the budget.

“Petrol prices, diesel prices higher. What are the benefits for honest tax payers? What is the tax benefit, pension benefit, gratuity amount holding by corporate companies?? You really care for honest people (Salaried)?” another person tweeted.

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The budget also announced that for I-T returns, PAN and Aadhaar cards would be made interchangeable to help tax payers file their returns.

“So ‘PAN and Aadhaar will become interchangeable’ is somehow a tax benefit to middle-class Indians? So, you first introduce a problem, and then increase the problem, make it more complicated, and then reduce it again (but still keep it confusing) – that somehow becomes a benefit?” a user questioned the decision.

“PAN and Aadhaar interchangeable will not help middle class,” another user tweeted.

People also criticised that the issue of unemployment was not addressed seriously.

India, Government, Economy
Finance Minister Nirmala Sitharaman announced that the government aims to increase the present $2.7 trillion economy to $5 trillion. Pixabay

“Hopeless budget 2019… no help or news for unemployment,” a tweet said.

The millennials, however, had some fun with the budget.

“So, the budget has been declared, still there is no announcement on subsidy for annual subscription of Netflix, Prime and Hotstar. Is this the India we want to live in?” posted a Twitter user.

The funny memes also kept circulating.

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Depicting the “before budget” and “after budget” feelings, a meme showed Prime Minister Narendra Modi first sitting on a rock, and then lying down flat on the rock.

The images and videos of former Congress President Rahul Gandhi looking blank and later dozing off went viral. (IANS)