Social costs of dollarisation will be high in Cuba

Significance

The economy, however, is in dire straits. Widespread shortages of everyday supplies are reminiscent of the crisis that followed collapse of the Soviet Union in the 1990s. Economic policy likewise has echoes of the past, with the government pursuing partial re-dollarisation.

Impacts

• With dollarisation likely to spread to more sectors of the economy, the CUC faces a gradual demise.
• Parts of the private sector catering to domestic demand, such as transport, might benefit from relaxed regulations.
• The crisis might drive the state to turn over more services to the non-state sector.