Our Interview with Cuba’s Ambassador Garmendía

Ambassador-Garmenia-interviewAmbassador Garmendía and Cuba Business Report's editor sat down together for an interview at the Cuban Embassy in Ottawa.

Currency Reform, Wages, and the New Entrepreneurs of Cuba

Cuba Business Report’s Editor met recently with His Excellency, Julio Garmendía Peña, Ambassador of Cuba to Canada, for an in-depth interview in three parts to discuss a wide variety of topics ranging from currency unification, wages, Canada and Cuba, Quebec in Cuba, the economy, foreign investment, and the question on everybody’s mind, the Trump question.

Part One of this interview focuses on a discussion of currency reform, wages and the new entrepreneurs in Cuba.

Ambassador Garmendía was born in 1952. He holds a degree in Russian Language, Literature and Translation from the Soviet Union (1975) and a degree in Political Science from the University of Havana, (1980).

The Ambassador is a career diplomat having served as Deputy Economic Counselor (1982-1985), and Economic Counselor (1986-1989) at the Embassy of Cuba in the Soviet Union. From 1994 to 1999, he was Minister Counselor, Deputy Chief of Mission at the Embassy of Cuba in Russia. From 2004 to 2008, he served as the Ambassador to the Ukraine. Today, Ambassador Garmendía is Cuba’s Ambassador to Canada in the city of Ottawa.

He is fluent in Russian and English.

Ambassador Garmendía is married and has two children.

Cuba Business Report:  Ambassador. Thank you for granting this time with me. I have some general questions about Cuba which interest many people. The first thing I’d like to discuss is currency unification in Cuba. Are there any updates on currency reform you could share? Are we looking at change this year?

His Excellency, Julio Garmendía Peña, Ambassador of Cuba to Canada:

First of all, I’m sure you know the reason why we have two currencies in Cuba. There was a time when we began to develop tourism and the only currency was the Cuban peso but lots of tourists were coming, bringing dollars or other currencies which began to circulate underground because it was not legal. This created a dis-balance in society and certain problems so we decided as a way of solving the issue was to create the CUC (the convertible peso). I would say that it solved the problem at that time because a lot of people that had dollars or other currencies, no longer had to commit a crime.

Cuba Business Report: Dollars became legal exchange,

Ambassador Garmendía:

Yes. And many, many people that worked in tourism that had (foreign) currency were able to exchange it legally, but with time it led to a distortion of the economy, you can say that. And, of course, with other consequences for the society, differences in the society. So when we began to update our economic model five years ago, one of the goals we set in our guidelines to achieve that update was to put an end to the double currency and have one Cuban peso. But it came to be more difficult than we thought because of the 1-24 the exchange rate.

The sudden change from one night to the next day can create certain chaos in the society. So we have been working on that for some years now and we expected to complete the unification process last year, but evidently it was not possible taking into consideration other factors. So we do hope it will happen this year but the National Bank of Cuba and the Cuban competent authorities are the ones in charge of that decision.

Cuba Business Report: People are expecting it to happen in April.

Ambassador Garmendía:

Whenever it comes, but most of the people realize it is a need because the two currencies from the macroeconomic point of view make a distortion to the economic indices or the numbers. An example, energy is priced in one currency and people pay in Cuban pesos so you never know the exact figures to create the GDP.

Cuba Business Report: There’s something else I’m also curious about. The average wage in Cuba. I know there is free health care, free education and the government supplied libreta for food. Does the Cuban Government have plans to increase the average wage of 20-25 CUCs a month? If one looks at the cost of living in Cuba and luxuries such as hotels, all are very expensive for Cubans with an average wage of 20 or 25 CUCS.

Ambassador Garmendía:

Well, you are right in some aspects of your questions but I can assure you that in other Latin American countries not every citizen can go to hotels, so only those people that have a good salary, a good job can afford that. You cannot compare Cuba with Canada, or Brussels, or Europe.

We have to be compared with our environment, with our natural region, Central and South America and the Caribbean. We are a country that doesn’t have enough natural resources and Cuba has been under a blockade for almost 60 years. But the Cuban government has worked to improve the salaries of the people, especially in some sectors or branches of the economy.

For example, in healthcare. Doctors and nurses and other healthcare personnel receive more salary than average Cubans, but it’s still not enough of course. People that work in some industries that are prioritized, for example, nickel, oil, receive much more money than a Cuban that works for the government.

Farmers receive a lot of money because they produce and sell their production. People that work in the cigar or tobacco industry also receive more than the rest of the workers in other branches of the economy.

Now we have the emerging sector of the economy, the new entrepreneurs, the people that work for themselves, paladars, taxi drivers, hair salons. There are more than 200 different activities allowed to carry out self-employment. And those people receive a lot of money compared to those that work for the government.

If you go to a hotel, especially in the summer, you can find lots of Cubans. So now there is a difference, the State has been working to improve the wage, but if you today double the income of everybody, tomorrow there will not be products in the stores. The inflation rate will rise very high. So it depends on productivity and production also. You cannot increase salary without a material response from industry. That’s one way to see this.

Another way to view this is that Cubans receive 20-25 CUCs but you cannot consider that figure alone because your children can go to school and do not pay one cent. This includes university education, and a doctorate if you are able to – it’s all free. You can receive free healthcare. If you have to receive a heart operation, you don’t pay anything. You receive housing. Most Cubans are home owners and do not pay taxes for housing.

You receive different social benefits from society which, if you add in the international values of those services, you can reach a salary of maybe close to what a Canadian with low income receives. That’s my point of view. I don’t want to convince you of that, but that’s my point of view.

End of part one of the interview with Ambassador Garmendía.

This interview will be continued. Coming up next: Canada and Cuba, Quebec in Cuba in the next published portion of this interview.

Author: The Editorial Board

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