Long lines in front of ATMs; people seethe as Cuba runs short of cash
HAVANA: Long queues outside banks and ATM’s 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 say there are several reasons behind the shortage, all somehow related to Cuba’s deep economic crisis, one of the worst in decades.
Omar Everleny Pérez, a Cuban economist and university professor, says 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 non-return of cash to banks.
“There is money, yes, but not in the banks,” said Pérez, adding that most of the cash is being held not by salaried workers, but by entrepreneurs and owners of small- and medium-size business who are more likely to collect cash from commercial transactions but are reluctant to return the money to the banks.
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 result, many end up hoarding Cuban pesos to later change into foreign currency on the informal market.
Converting those Cuban pesos to other currencies poses yet another challenge, as there are several, highly fluctuating exchange rates in the island.
For example, the official rate used by government industries and agencies is 24 pesos to the US 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.
The Cuban economist notes that in 2018, 50 per cent 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 per cent of cash was in the wallets of individuals.