This was sent to me by friends that work in the Cuban Embassy, I thought it was worth posting.

---------- Original Message ----------------------------------
From: "Cuban Embassy" <cubahcons@coralwave.com>
Date: Sat, 14 Feb 2004 19:11:56 -0400

Cuban pesos do counts...
With one dollar, you can pay a month rent in Cuba, or two
electricity bills, or three phone bills or 91 pounds of rice, or a
one liter of milk for three months ... this is an evidence that
some people try to silence when you compare workers' monthly wage
with dollar's public exchange rate. The Minister-President of the
Cuban Central Bank also has analyzed on this theme during the year
2001 that is frequently distorted by the international press.
By FRANCISCO SOBERÓN
It is very common to see international news reporting people
should live with a monthly income of eight dollars, on the basis
of exclusively changing the money with the exchange rate at CADECA.
But this is intentionally evil because this news never takes into
account the population's expenses. Let's quote an example the
average electricity bill of a Cuban family is nearly 12 pesos.
However, we have never seen an international wire saying: " The
standard Cuban family receives electricity at a 54 dollar cents
per month."
There is no intention to deny that the crisis' negative
consequences have been seen in Cuba, due to the defeat of
Socialist countries and the economic war held by the United States
that have not only diminished people's capacity to buy with the
national money but also the negative effect for wages as the main
means for their needs.
Urgency to prioritize the quickly development of certain branches
that create hard currency's income; remittance from abroad, the
showing up of private jobs and agric markets as well as the need
of controlling money offer to halt (as it did) an inflation spiral
that would have destroyed the economy for the worst, are the main
causes that have immediately caused Cubans' life level not to be
always determined by their wages, but by factors that are not
directly proportional to the social importance of their work.
TWO EXCHANGE RATES
Within Cuban philosophy, the policy of guaranteeing certain
products and basic services have prevailed for the good of all and
that has been granting the following:
* Controlled prices- widely subsided - some basic foods and main
services such as electricity, water, transport and phone, among
many others, also public performances.
* Health services are free and the sale of medicine takes places
with controlled prices, also with an outstanding subsidy.
* Free education at all levels
* House rents were also kept at a standard level and no tax has
been imposed on private owners that represent 85 % of families in
the island.
All these measures mean that the average citizen in the island has
a real purchasing power (A significant one in many cases) that
would have to be added to the nominal wage if fair comparisons are
to be done.
Furthermore, and as part of the economic strategy of the country,
a socialist fair principle is aimed to become true. Everyone
according to his capacity should receive the result of his work.
This will is expressed in measures that gradually have been put in
force among many others.
* Cuban pesos' system's remuneration, according to the work's
results, benefit nearly 710 thousand workers and in Cuban
convertible pesos, nearly 335 thousand workers as well.
* The special stores' net where nearly 700 thousand workers can
buy products with subsided prices, these products are the ones
being sold as part of the bond system according to work result.
* Wages' increase within health, education and service branches
Any analysis on this theme, should take into account that the
economy runs with two rates' exchange. The rate exchange of the
Cuban peso for all kinds of official transactions which is 1= 1
and the companies' account that work in the country that do their
tasks on this financial grounds. With the legalization of currency
tenancy and its use, there also appeared an informal exchange
activity among the people and the rate is decided on the offer and
demand situation.
Later on, this market was finally settled down with the creation
of Exchange Houses, where you can sell and buy currencies. During
the worst moments of the nation's crisis one dollar was worth 150
Cuban pesos. With the gradual recovery of the economy, money and
tax measures adopted, there has been a steady recovery of the
Cuban peso for the last years. Latest rates for Cuban peso are
nearly 20/26 per each dollar.
Due to the characteristics of the island's economy, this market
enlarges a very reduced segment of the country's economic activity
and in no way it shows a general relation of the real value of the
Cuban peso and that of dollar.
Some pretend to ignore these realities and have chosen this
exchange rate as a magic figure to determine the magnitude of
incomes and not of expenses.
SUBSIDED PRICES
There are two prices' categories in the island for the Cuban
pesos.
* Subsided prices (basic services, distributed products granted by
the ration book, etc.)
* Prices in the free market (agric market, industrial market, etc)
With respect to the subsided prices, if we take as a sample the
monthly consumption of basic products, whose distributed is
controlled and have been kept even in the worst of circumstances
for a family with 4 members, we would have the following results:
Basic Family Shopping Basket for a family of four members
(Including an under age of 7 years)
Products
Monthly Quantity
(Per people)
Price in Cuba in Cuban pesos
Rice
6 pounds
1.44
White sugar
3 pounds
0.42
Brown sugar
3 pounds
0.24
Coffee
4 ounces
0.24
Eggs
12 units
1.80
Bread
24 kgms
1.50
Milk
30 litter *
7.50
Potato
5 lbs
2.00
Total:
15.4

*Only for kids under 7 years

Value for this basic shopping basket for a family of four in Cuba
is 15,14 Cuban pesos divided among four is equal to 0.56 Cuban
pesos.
Value of this same basic shopping basket for a family of four
members in the United States with prices in dollar is equals to
136.80 dollars.
Parity of the buying power= 0. 44
That is to say that the purchasing of these very products share a
purchasing power of 2,26 North American dollars per each Cuban
peso.
If we decide to take an alternative formula, and we use Cadeca's
rate exchange, we could say that each family head with four people
receives a monthly wage of 3 009.60 Cuban pesos (136.80 dollars if
we rate dollar at 22).
These comparisons neither show a real exchange rate of peso with
respect to dollar, so these estimations would be much more
complex, but it indicates a very important characteristic of the
economy. In order to obtain this minimum of food products and
others that are distributed in a rationalized way, the average
Cuban citizen counts with a buying power of nearly 2,26 dollars
per peso. We could have an equal result if we do an equal analysis
with respect to services that are offered in the country with
subsided prices.
OTHER IGNORED ADVANTAGES
Although it is perfectly clear that rationed products do not cover
feeding needs of the population, it is undeniable they represent a
means of guaranteeing a stable supply of a certain quantity of
foods on the basis of absolute equality. One has to be very nasty
to ignore the importance of this effort. A small country, poor and
siege by the mightiest power on earth, dedicates every year more
than 600 millions dollars in direct importations to guarantee
these foods to all citizens. If we add hard currency's costs due
to the domestic distribution, the invoice would increase in dozens
of millions dollars.
Moreover, 140 millions dollars are dedicated every year in fuel to
generate electricity with prices widely subsided, to 95 % of the
Cuban population. Besides, costs per investment and plants'
maintenance and electric networks reach the figure of more than
one hundred millions of dollars every year.
Needless to say, an important part of the Cuban workers depend on
a steady wage that is not enough to satisfy their needs in the
free markets, all those needs that are not duly covered by the
subsided prices- However, if you take this situation out of
context, from the rest of the economy's characteristics, it would
be extremely unfair.
There are other elements that could help to analyze the theme
deeper. For example, according to data taken by a Swiss Bank
edition, the tax levels on wages in an important group of
countries is between 30 and 40 per cent and the wage received is
between 30 and 60 per cent that is dedicated to the rent. In Cuba,
a Revolutionary Act issued long before favors 85% of families,
which own their houses. Such circumstances have an outstanding
impact in the real purchasing power of the Cubans. Let's take into
account that according with the same source, a three room
apartment's average rent in New York oscillates between 3 230
dollars (expensive) and 1 190 (cheap). You can say we are talking
about one of the most expensive and exclusive cities of the world,
but if we refer to some Latin American capitals, considered less
expensive and exclusive, we see rents for this kind of apartment
goes from 2 000 dollars (expensive) to 500 (cheap). In the case of
Cuba, it is like a real buying power of hundreds of dollars would
have guaranteed every month, as a result of the Revolution's a
conscious action: the massive handing over of houses' properties.
As it has been said before, for Cubans that are still in the
process of houses' depreciation, the existing formula is to do
that through a rent payment, whose national average is nearly 23
pesos per month that includes the rent itself plus interests.
No other country of the world is known where the population enjoys
of this advantage in such a massive way.
It is also interesting to know (according to data of the same
source) that in some countries the average wage is less than the
average rent in capital areas, a very effective way of social
apartheid.
To all things said before, one would have to add, something vital
for the human being, such as health services and education, all
free in Cuba, if you estimate that in dollars according to the
prevailing prices within the United States, it means Cuban citizen
owns a buying power that is more than thousands of dollars every
year.
With respect to higher education, aiming to offer more concrete
data, we have revised registration' rights for a group of 41 North
American universities for the course 1998/1999 and these go from
17 628 dollars in Southern Methodist University to 24 250 at
Princeton University. We should say that this is only the cost for
registration in a single year. If we were to talk about total
costs in a year, we could take as a reference the student's budget
within the Law Colleague in Boston that goes to 36 630 dollar per
year, including 22 830 of registration, 962 for books, 9 130 for
housing and food, 738 for transportation and 2 970 for other fees
and expenses.
All these data are taken from public advertisements of the North
American universities.
With respect to health services, we could also quote some figures
that could help the analysis of the theme. For example, the cost
of a bed in an Intensive Case Unit (of an adult or a child) is of
980 dollars per day, that only cover nursery cares, and not the
doctor's assistance and medicines that should be additionally paid.
The cost per each birth goes from 3 000 and 4 000 dollars and that
of mammography is of 100 USD.
A cave filling costs 60 dollars and a molar extraction, 40.
With respect to medicine, we could mention the following examples:

Medicines
Prices in dollars in the United States

Hyper tensors (similar to Atenolol) 90 tablets of 100 mg
149.88
Sodium Valproato (anti convulsive) 120 tablets de 500g
148.88
Anti- depressive (similar to Trifluperazine) 90 tablets of 100 mg
109.80


Oral Hipoglicemiante (similar to Debenclamida) 120
tablets of 1 000 Mg
97.99
Insulin vial 10 ml
19.90
Ansiolitics (similar to clorodiaxipóxido) 90 tabletas de 2 Mg
117.00
Antihistamines (oral) 60 capsules of 60 mg
50.79
Piroxicam (anti inflammatory 90 capsules de 20 mg
10.99
Prednisone (steroid)30 tabletas de 10 Mg
4.79
Amoxicillyn 30 cápsulas de 250 Mg
7.39
Penicillin potassium 1 bulb
4.00
In Cuba, some of these medicines or similar cost less than a Cuban
peso and most of them less than ten, so the purchasing of
medicines with a single Cuban peso equals dozen of dollars.
Moreover these are a lot of cases in which medicines are
completely supplied free. For example, Cuba counts with a
vaccination program wholly free, and is one of the most advanced
of the world, that protects all children not only against common
illnesses such as polio, diphtheria, measles, typhus,
tuberculosis, tetanus, and other until reaching 13 illnesses, with
more than two million application per year, from the different
schemes, but also Hepatitis B and Meningitis B and C.
Even when there could be different perceptions on the theme, it is
evident there is a determination to pay attention to basic needs
of the human being, the real buying power of a Cuban citizen, can
not simple be determined taking as a reference the CADECA's
exchange rate, which shows a limited relation of offer-demand of a
very reduced field of money transactions.
That is why it is absolutely ridicule to reduce this rich and
complex reality, reporting this subterfuge that expresses the
buying power of Cubans (comparing them with other countries where
the market economy reigns and all services and goods are charged
according to the market)
In any case, if anyone wishes to talk on the rate exchange at
Cadeca, one could say that with one dollar, the average Cuban can:
Pay a monthly rent
Two electricity bills
Three phone bills
Buy a rice ration for four members
To attend 22 baseball games in the big leagues
Buy a litter of milk per day to a kid under seven years during
three months