New president faces daunting challenge of modernising state-run economy to make it more rational and effective.

Havana, Cuba – The new president of this country, Miguel Diaz-Canel, is promising to defend the socialist revolution while also modernising the economy.

However, Cubans are sceptical about seeing many improvements even though Diaz-Canel is the Caribbean country’s first leader – after more than half a century – who is not from the Castro family.

For them, just to get their daily bread means having to stand in queues with their ration cards in hand.

What they receive at the end of the wait is one roll of bread a person each day at the state-subsidised price, a system that dates back to the Soviet Union.

In recent years, the government has been forced to cut back on ration-card items such as rice, beans, sugar, salt and occasionally meat, paid with Cuba’s national currency – the peso, also known as the “national peso”.

“If we didn’t have this option, those on a worker’s wage could not afford to buy almost anything,” says Miladis, a Havana resident.

One can also use national pesos to buy fruits and vegetables. But for almost everything else – from shampoo to shoes – citizens need “convertible pesos” (CUC), the Cuban government’s replacement for the US dollar, which had been temporarily accepted as legal tender following the loss of value in the national peso in 1993. The CUC is pegged at 1:1 with the US dollar and is worth about 24 national pesos.

Dual-currency system

On an average monthly wage, paid in national pesos, a Cuban can buy 30 CUC, which is not enough to fill a car with petrol.

Cuba’s dual-currency system is a monetary abnormality that is stunting economic growth and scaring off investment.

And, like the ration card, doing away with it is a must if Diaz-Canel is going to make good on his promise to update Cuban communism.

The government has not done it already because merging the two currencies into one is much more complex than it sounds.

In a country where the state is supposed to always provide, such a merger is going to make life much more difficult for Cubans who are already struggling.

Eliminating the dual-currency system will devalue the national peso, but it is a necessary change, concedes Miriam Leiva, a dissident who was once a staunch supporter of the 1959 Cuban revolution led by the late Fidel Castro and his brother Raul.

After watching Thursday’s presidential handover of power from Raul Castro to Diaz-Canel, the only changes she expects are on the economic front.

“On an emotional level, I don’t feel any change. I hope I’ll feel it someday, when our society really opens up and I have the right to participate no matter my opinions.”

The transition to a post-Castro era does not signify political change. Nevertheless, reforming the state-run economy to make it more rational and effective could be almost a revolutionary change.

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