Miami Herald
Miami, Florida
21 July 2022

Cuba to allow foreigners to invest in private businesses, will restart dollar exchanges
By Nora Gámez Torres

Facing a humanitarian crisis that threatens to set off new protests on the island, the Cuban government is taking the unprecedented step of authorizing foreign investment in its emerging private sector and will resume an official exchange market for the dollar, among 75 measures authorities said Thursday are meant to boost the country’s economic recovery.

In a National Assembly meeting Thursday, Economy Minister and Vice President Alejandro Gil said Cuba’s economy is recovering more slowly than it needs to and that authorities will prioritize attracting foreign investment and channeling the money reaching the country through tourists and foreign remittances.

“We are authorizing foreign investment in the non-state sector,” Gil said. The government will set priorities and limit which private businesses will be allowed to receive foreign investment. Cuba passed new laws last year allowing the creation of small and medium-sized private businesses for the first time in decades. But it was unclear if those businesses would be able to partner with foreign investors or receive financing from abroad.

In May, the Biden administration authorized an American company to finance and invest in a private business in Cuba. But it was not known if the Cuban government would allow it.

That license was a catalyst for Thursday’s announcement, said John Kavulich, the president of the U.S.-Cuba Trade and Economic Council, who heads the U.S. company that received the authorization in May. “There was never a doubt that the government of Cuba would authorize direct equity investments and direct financing for privately owned companies located in Cuba,” he said. “The government is in desperate need of the economic activity, the jobs, the creativity, the efficiencies that are the hallmark of a robust private sector.”

Gil also also announced that Cubans and tourists on the island would be able to again exchange dollars in an official market that was shut down during the pandemic, as the economy sank and the cash-strapped government was unable to sell dollars to the population. As a result, many Cubans and international travelers ended up exchanging foreign currency, including euros and other currencies, on the black market.

Gil did not say when the service would resume nor the rates. Currently, a dollar sells for 120 Cuban pesos, the local currency, on the black market. But the government sets an official exchange rate for state enterprises at 24 pesos for a dollar. The minister said the new rate will be “different” from the official one because it needed to be grounded on “economic foundations,” all but acknowledging the current rate made little economic sense, as many economists have said. It is not known if the reopening of the exchange houses will mean that Cubans will be able to use dollars again to buy at government stores

The government will also lift limits on certain goods travelers can import, such as cellphones and computers; slash custom fees from the current 100 percent to 30 percent on taxable goods imported by travelers, and cut in half the price of international parcels. The minister defended the measures, saying they are all in tune with the socialist economic model and had been thoroughly studied. He said none of the announcements would have an immediate impact, but he was adamant that the country needed cash to address people’s needs quickly. “Everything that goes against or does not favor the capture of foreign currency and the increase in supply is not going in the direction in which we have to work, and everything that we do in that direction — not without risk — is going in a positive direction,” he said.

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