After a failed attempt a few years ago to unify its monetary system, Cuba announced the elimination of the double currency on Tuesday. This is the latest step by Havana to reorganize its socialist model and give a much-needed boost to the island’s economy.

The double currency policy was adopted in 1994. Since then, Cubans have received their salaries and paid for local products and basic goods with the Cuban peso (CUP), whereas imported items and services, such as tourism, are priced in “pesos convertibles” (CUC). Each CUC is exchangeable for an American dollar, or 25 CUP, according to the official rate.

The disparity of prices between products priced with CUC and the ones with Cuban pesos is enormous. An imported bottle of olive oil can cost between two and three CUC ($2-3); on the other hand, the weekly food budget of a Cuban family averages 25 pesos ($1). Nevertheless, local products are scarce and imports are not affordable for the average Cuban, who makes 500 pesos per month ($20) – and in many cases, not even legal to purchase, as they are reserved for expats and tourists.

However, subsidizing goods costs the government more than $1 billion a year, which Havana can no longer afford -- not to mention that 80 percent of those goods are imported.

The government issued a statement on Tuesday on the national news agency Granma, saying that monetary unification was not "the solution to the problems, but its application is necessary to restore the value of the Cuban peso and its role as our currency, our purchase means and our treasury." The statement added that the first stage of the change will affect companies in particular: "It is our goal to increase efficiency, a better measurement of economic processes and a higher stimulation of industry."

The statement, however, did not stipulate dates or specific measures to fulfill these goals. It did assure Cubans that personal savings will stay intact, whether they are listed in CUC, CUP or in foreign currency.