HAVANA (AP) — Alejandro Fonseca waited in line for several hours outside a Havana bank hoping to withdraw Cuban pesos from an ATM, but when it was almost his turn, the money flew out. is exhausted. Angry, he got on his electric tricycle and rode several kilometers to another branch where he finally managed to withdraw money after losing all morning.
“It shouldn’t be that hard to get the money you earn from working,” the 23-year-old told The Associated Press in a recent interview.
Fonseca is one of a growing number of frustrated Cubans who face a new obstacle while navigating the island. already complicated monetary system — a lack of liquidity.
Long queues outside banks and ATMs in the capital, Havana, and beyond begin to form early in the day as people search for cash for everyday transactions like buying money. food and other essentials.
Experts believe that there are several reasons for this shortage, all linked in one way or another to the deep economic crisis Cuba is going through. one of the worst in decades.
Omar Everleny Pérez, a Cuban economist and university professor, believes that the main culprits are the government’s growing budget deficit, the non-existence of banknotes with a nominal value greater than 1,000 Cuban pesos (around $3 on the market). parallel), stubbornly high inflation and the absence of money. return of cash to banks.
“There is money, certainly, but not in the banks,” Pérez said, adding that most of the money is not held by employees, but by entrepreneurs and owners of small and medium-sized businesses that are more likely to raise funds. money from commercial transactions but are reluctant to return the money to banks.
According to Pérez, this is either because they do not trust local banks or simply because they need to convert Cuban pesos into foreign currencies.
Most entrepreneurs and small business owners In Cuba, they must import almost everything they sell or pay in foreign currency for supplies needed to run their business. As a result, many end up accumulating Cuban pesos and then changing them into foreign currencies on the informal market.
Converting these Cuban pesos into other currencies poses yet another challenge, as there are several highly fluctuating exchange rates on the island.
For example, the official rate used by industries and government agencies is 24 pesos per US dollar, while for individuals the rate is 120 pesos per dollar. However, the dollar can reach up to 350 Cuban pesos in 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 Cuban banks. But in 2022, the latest year for which information is available, 70% of cash was in people’s wallets.
Cuban monetary authorities did not immediately respond to AP’s emailed request for comment.
The liquidity shortage comes as Cubans struggle with a complex monetary system in which several currencies circulate, including a virtual currency, MLC, created in 2019.
Then, in 2023, the government announced several measures aimed at promoting a “cashless society”, making it mandatory to use credit cards to pay for certain transactions – including purchases of food, fuel and other basic goods. necessity – but many companies simply refuse to accept them. .
Worse, stubbornly high inflation means that more and more physical bills are needed to buy products.
According to official figures, inflation rose to 77% in 2021, then fell to 31% in 2023. But for the average Cuban, the official figures barely reflect the reality of their life, since inflation in market can reach up to three figures on an informal level. walk. For example, a carton of eggs, sold for 300 Cuban pesos in 2019, sells for around 3,100 pesos today.
And this, while the monthly salary of Cuban civil servants oscillates between 5,000 and 7,000 Cuban pesos (between 14 and 20 dollars on the parallel market).
“Living in an economy that, in addition to having several currencies, has several exchange rates and three-digit inflation, is quite complicated,” said Pavel Vidal, Cuba expert and professor at the Javeriana University of Cali in Colombia.
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Andrea Rodríguez on X: www.twitter.com/ARodriguezAP
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