Uncle Sam Saves Cuba Money

- jim Young   

“Every morning we are born again. What we do today is what matters most.” - Buddha

From 1994 to 2020, tourists had to exchange their home country’s currency into Cuban Convertible Pesos (CUC) to spend when visiting Cuba. The exchange rate for the CUC was usually valued pretty close to the U.S. dollar.

As of January 21, 2021 the CUC has been discontinued. Tourists typically now exchange their home country’s currency into U.S. dollars prior to visiting Cuba.

Manufacturing money that is difficult to counterfeit is a costly process to say the least. In addition to the initial costs of printing currency, the average lifespan of paper currency is 4.5 to 8.5 years depending on the denomination, after which it needs to be replaced.

While I could find no data to indicate how much Cuba actually spent on manufacturing the CUC for the past 25 plus years, the U.S. 2023 annual budget, has allowed $265.5 million for variable printing costs such as paper, ink, labour and direct overhead costs and an additional $587.0 million for fixed printing costs such as indirect manufacturing overhead, general and administrative costs, research and development and prepress and engraving for currency required in the U.S.

Tourists spent between $2.5 billion and $3 billion per year in Cuba prior to Covid most of which will now be in the form of U.S. currency.

I’ll leave it to you to guess, based on those numbers, just how much the savings from the elimination of the CUC might be for the Cuban government, but it’s fair to say the savings will be substantial.

Now, I’m not suggesting the main reason for the elimination of the CUC in Cuba was to save on the manufacture and maintenance costs of the CUC, but it’s certainly a happy perk for the Cuban government.

So who is going to bear those costs now? The bulk of the costs of manufacturing the currency that will be spent in Cuba will be passed onto the U.S.

And isn’t that just a little bit ironic when you consider the U.S. has imposed the longest trade embargo against Cuba in modern history in spite of the condemnation of the United Nations General Assembly?

In some small way, Cuba has found a way to get the U.S. to pay some of the Cuban government's operating costs.

Take THAT  to the bank, Joe & Donald!

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