Cuban consumers are hearing a bit of good news.
Starting Friday, the island’s national currency, the Cuban peso, gains seven percent buying power against the official exchange rate, the first revaluation by the Cuban Central Bank in four years.
Speaking on national television on Thursday, Cuban President Fidel Castro said the peso has gained strength in the local economy as a result of a series of recent fiscal measures taken by his government.
The measures include strong trade deals with China and Venezuela, the discovery of petroleum deposits in Cuban waters, the abandoning of the U.S. dollar, and a boost in nickel production with both Chinese ventures and the Canadian company Sherritt International.
According to local sources, two additional factors have helped inflate national revenues.
Tighter government control over state companies has centralized profits, allowing for a more rational use of returns. In fact, some 90 percent of the communist-run economy is in state hands, according to Reuters.
Also, Cadeca, the Cuban exchange houses, raked in an estimated $1.2 billion when consumers were forced to replace their U.S. dollars with a local currency last November.
Good times ahead
Castro stated that favorable economic conditions would help the peso to continue to gain strength.
“These circumstances have created conditions for a progressive, gradual and prudent revaluation of the national currency,” according to the Cuban Central Bank.
In addition, new housing and state salary hikes appear to be on the horizon.
Cuban workers are hard-pressed to make ends meet on their average monthly wages of 250 pesos. An estimated 60 percent of the population supplements their peso salaries with hard currency, earned locally or sent from family members living abroad.
The rest of the population struggles to exchange some of their peso earnings into the local hard currency that buys imported essentials such as cooking oil and milk.
Blackouts will be 'history'
But, the most welcomed consumer news had to do with Cuba’s critical energy shortages. “Blackouts will soon be history,” Castro stated, pledging an end to power shortages over the next 18 months.
Since Moscow stopped shipping oil to the island almost 15 years ago, Cuba has been plagued with regular blackouts that make life even harder in this developing nation.
In addition to pumping its own offshore petroleum, the Cuban government has begun making a major capital investment in overhauling the country’s feeble power grid.
Recently, the government spent $34 million for spare parts and supplies from Japan just to upgrade one power plant in central Cienfuegos province. An additional 300 smaller power plants are currently under production.
In the short-term, Castro said his government plans to put more imported food on the family table and make scarce consumer products available to every Cuban household, including three million electric pressure cookers that go on sale after April first.