(CMR) Frustrated Cubans have been grappling with a cash shortage as they try to navigate the country's economic crisis, one of the worst in decades.
The Associated Press reported that long lines outside banks and ATMs in the capital, Havana, and beyond start forming early in the day as people seek cash for routine transactions like buying food and other essentials.
Experts told the AP that the reasons behind the shortage are related to Cuba’s deep economic crisis.
Omar Everleny Pérez, a Cuban economist and university professor, said the main culprits are the government’s growing fiscal deficit, the nonexistence of banknotes with a denomination greater than 1,000 Cuban pesos (about $3 in the parallel market), stubbornly high inflation and the nonreturn of cash to banks.
“There is money, yes, but not in the banks,” said Pérez, adding that most of the cash is held not by salaried workers but by entrepreneurs and owners of small—and medium-sized businesses who are more likely to collect cash from commercial transactions but are reluctant to return it to the banks.
This, Pérez says, is either because they don’t trust the local banks or simply because they need the Cuban pesos to convert into foreign currency.
Most entrepreneurs and small business owners in Cuba have to import almost everything they sell or pay in foreign currency for the supplies needed to run their businesses. As a consequence, many end up hoarding Cuban pesos to later change into foreign currency on the informal market.
Converting Cuban pesos to other currencies poses yet another challenge, as the island has several highly fluctuating exchange rates.
For example, the official rate used by government industries and agencies is 24 pesos to the U.S. dollar, while for individuals, the rate is 120 pesos to the dollar. However, the dollar can fetch up to 350 Cuban pesos on the informal market.
Pérez notes that in 2018, 50% of the cash in circulation was in the hands of the Cuban population and the other half in banks on the Caribbean island. But in 2022, the latest year for which information is available, 70% of cash was in the wallets of individuals.
Cuban monetary authorities did not immediately respond to the AP’s emailed request for comment.
The shortage of cash comes as Cubans grapple with a complex monetary system in which several currencies circulate, including a virtual currency, MLC, which was created in 2019.
Then, in 2023 the government announced several measures aimed at promoting a “cashless society,” making the use of credit cards mandatory to pay for some transactions — including purchases of food, fuel and other basic goods — but many businesses simply refuse to accept them.
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