Cuban Accounting

[Josephus]

http://granma.cu/ingles/cuba-i/14mar-Agreement.html


Here is a long-winded Cuban governemtn release from last March which re-pegs the Convertible Peso to the US Dollar at one-to-one. The Convertible Peso, in short, is the currency used in the tourism industry. When I go to Cuban hotels, I buy the Cuban Convertible Peso at 1-1 to the US dollar.
It is the last paragraph in that statment I find interesting:

This decision does not affect the current exchange rate of the Cuban peso in relation to the convertible peso in CADECA outlets, which remains set at 24 Cuban pesos for operations covering the sale by the population of convertible pesos, and 25 Cuban pesos for operations covering the purchase by the population of convertible pesos. Nor does it modify the official exchange rate of the Cuban peso against the convertible peso utilized in state sector accounting, which establishes that one Cuban peso is equal to one convertible peso.

In other words, officially one Cuban peso=one convertible peso. But, in practice...well, that's not quite what we're saying.

[Admiral Yi]

Bottom line is Cubans are paid the equivalent of $5 a month unless they want to buy something with it.

[derspiess]

Link is slower than dirt.  Must be at least 3 or 4 other Languishites bogging down the server in Havana

[The Minsky Moment]

It's byproduct of a hybrid central planning economy with some market reforms.

The regular Peso is effectively government-issued scrip for the purchase and sale of goods produced within the traditional centrally-planned command economy.  For internal accounting puposes the Cuban government treats these as 1 Peso to $1.  It's basically arbitrary - they could just as well as treat as 2 Pesos to $1 or 10 Pesos to $1 or 1 Peso to $10.  the only impact relates to the degree of distortion created and incentive to try to arbitrage with the CUP where possible.

The CUP is government-issued scrip that reflects foreign currency reserves and is set at $1 - it is like a Cuban government version of an Amex traveller's check.  It exists to control foreign exchange within the country and keep it out of non-government hands.  It is also a tool to extract a massive tax from tourists and foreign investors.   

The 24/25-1 conversion ratio reflects the government's rough guess at what a market rate of exchange would be.   It alllows Cubans to access foreign goods that otherwise would not be supplied through the command economy, albeit at the cost of paying full market prices.

[Zanza]

Maybe we can invite some Cuban accountants to help us fix the Greece situation? 

[Josephus]

Thanks MM. Always wondered how that worked.

[Siege]

Good job Josephus.
Keep helping perpetuate a ditactorship and the suffering of a poor people.

[Neil]

At least they're suffering less under Castro than they would under a free democracy.

[DGuller]

Good job Josephus.
Keep helping perpetuate a ditactorship and the suffering of a poor people.

Because embargo is working out so well.  Any year now.

[fhdz]

Good job Josephus.
Keep helping perpetuate a ditactorship and the suffering of a poor people.

Because embargo is working out so well.  Any year now.

Yeah, Castro is awful but our embargo has been more harmful to the Cuban people and has done more to keep them in poverty than Castro has. Hate to say it, but it's true.

[Admiral Yi]

Codswallop.

[Valmy]

Yeah, Castro is awful but our embargo has been more harmful to the Cuban people and has done more to keep them in poverty than Castro has. Hate to say it, but it's true.

I don't hate to say it.  The embargo is just hilariously counter-productive and idiotic policy, kept in place by intertia decades after its original purpose has past.  I would be really upset by it but there are so many similar things being done by the Feds.

[derspiess]

Yeah, Castro is awful but our embargo has been more harmful to the Cuban people and has done more to keep them in poverty than Castro has. Hate to say it, but it's true.

How would their lives be much different?

[Valmy]

Codswallop.

You are so right.  It was totally logical we took North Korea off the list and left Cuba on since North Korea is so freedom loving and so much less dangerous than Cuba.

[Valmy]

How would their lives be much different?

So the embargo makes no difference at all and has no effect?  Then not only is it idiotic it is impotent and pointless as well.