Cuba runs short of cash and long lines form

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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.
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.
As a consequence, 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.
However, the dollar can fetch up to 350 Cuban pesos on the informal market.
But for the average Cuban, the official figures barely reflect the reality of their lives, since market inflation can reach up to three digits on the informal market.
For example, a carton of eggs, which sold for 300 Cuban pesos in 2019, these days sells for about 3,100 pesos.
The monthly salary for Cuban state workers ranges between 5,000 and 7,000 Cuban pesos (between $14 and $20 in the parallel market).

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HAVANA — Alejandro Fonseca waited in line for hours outside a bank in Havana in hopes of taking out Cuban pesos from an ATM, but the money ran out just as it was almost his turn.

After wasting the entire morning, he angrily mounted his electric tricycle and rode several kilometers to another branch where, at last, he was able to withdraw some cash.

The 23-year-old Fonseca stated in a recent interview with The Associated Press, “It shouldn’t be so difficult to get the money you earn by working.”.

A shortage of cash is another obstacle that Fonseca and other aggrieved Cubans must overcome as they navigate the island’s intricate monetary system.

People line up early in the morning to get cash for everyday expenses like buying food and other necessities, and long lines form outside banks and ATMs in Havana and other cities.

The severe economic crisis that Cuba is currently experiencing—one of the worst in decades—is thought to be the cause of the shortage for a number of reasons, according to experts.

A professor of economics at the University of Havana named Omar Everleny Pérez blames the government’s widening fiscal deficit, the absence of banknotes worth more than 1,000 Cuban pesos (roughly $3 on the black market), the country’s unabatedly high inflation rate, and the failure to return cash to banks.

Money exists, but it’s not in the banks, according to Pérez, who also added that small- and medium-sized business owners and entrepreneurs, who are more likely to receive cash from commercial transactions but are hesitant to give it back to the banks, hold the majority of the cash.

According to Pérez, the reason for this could be attributed to their lack of confidence in the local banks or their necessity to exchange the Cuban pesos for foreign currency.

The majority of Cuban business owners and entrepreneurs must import practically everything they sell or pay in foreign currency for the supplies they require to operate their companies. Many end up hoarding Cuban pesos as a result, which they later exchange for foreign currency on the black market.

There are several extremely variable exchange rates on the island, which makes converting those Cuban pesos to other currencies difficult.

For instance, government businesses and agencies use the official exchange rate of 24 pesos to the U.S. S. individual, the exchange rate is 120 pesos to the dollar. On the black market, though, a dollar can bring up to 350 Cuban pesos.

According to Pérez, the Cuban population held half of the cash in circulation in 2018, with the remaining half being held by banks on the Caribbean island. However, 70% of the cash was in people’s wallets in 2022, the most recent year for which data is available.

The AP emailed the Cuban monetary authorities requesting comment, but they did not get back to them right away.

The lack of cash is a result of Cubans navigating a convoluted monetary system that uses multiple currencies, including the virtual MLC, which was introduced in 2019.

Unabatedly high inflation makes matters worse by requiring an increasing amount of physical currency to be purchased goods.

Official data indicates that in 2021 inflation was 77 percent; by 2023, it had decreased to 31 percent. In the informal market, however, market inflation can reach triple digits, so for the average Cuban, the official figures hardly represent reality. For instance, in 2019 the price of a carton of eggs was 300 Cuban pesos; today, it is approximately 3,100 pesos.

State employees in Cuba make between 5,000 and 7,000 Cuban pesos per month (roughly $14 to $20 on the black market).

Professor Pavel Vidal of the Javeriana University of Cali in Colombia, an authority on Cuba, said that it is “quite complicated” to live in an economy that has multiple currencies, multiple exchange rates, and three years of inflation.

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