February 7, 2020 / 4:59 AM / 14 days ago

Cuba to sell cars in tradeable currency as dollarization gains pace

HAVANA (Reuters) - Cuba’s cash-strapped government said on Thursday it would start selling cars in tradeable currencies rather than in convertible Cuban pesos this month as it continues to dollarize swathes of its retail sector.

FILE PHOTO: Vintage American-made cars are seen parked along the Malecon, across the street from the U.S. embassy in Havana, Cuba. REUTERS/Pablo Martinez Monsivais/Pool/File Photo

The country’s inefficient state-run economy is going through a liquidity crisis due to the implosion of ally Venezuela’s economy and the tightening of the decades-old U.S. trade embargo under President Donald Trump.

In recent months, the government has opened up around 80 “dollar stores” selling some of the items such as home appliances and car parts that it has to buy abroad in tradeable currencies.

Until then, the state which has a monopoly on most of the retail sector had sold such items in the country’s convertible peso, which it says is equivalent to the dollar but has no value abroad. Tradeable currencies had not been deemed legal tender for purchase in Cuba since 2004.

Iset Maritza Vázquez Brizuela, First Vice President of Cuba’s largest commercial corporation CIMEX, said on Thursday on a roundtable discussions on state TV the country would continue to open more dollar stores this year.

She said some of the stores would also expand the range of products they sell to include, for example, electrical generators, security systems and heaters.

Transport Minister Eduardo Rodríguez Dávila said on the roundtable discussion cars would now be sold in tradeable currencies.

Finance Minister Meisi Bolaños Weiss said there would be a discount of 10 percent on the current price in convertible pesos, although that means they will remain at a huge markup given the current markups of 400 percent or more.

As such, modern cars are unlikely to crowd out the 1950s vintage Chevys and Soviet-era Ladas that still dominate Cuba’s streets any time soon.

The profit would continue to go toward a fund for improving Cuba’s inadequate public transportation, she said.

Cuban stores continues to sell food and basic household items in convertible pesos or its other currency, the local peso.

Reporting by Sarah Marsh; Editing by Kim Coghill

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