There is a lack of money in Cuba: the country is experiencing a shortage of banknotes amid the worst economic crisis in decades | World

Alejandro Fonseca stayed several hours in line outside a bank in Havana, Cuba, hoping to withdraw Cuban pesos from an ATM. When it was almost his turn, however, the money in the cash register is gone.

He angrily climbed onto his electric tricycle and traveled several kilometers to another branch, where he finally managed to withdraw some money after wasting the entire morning.

“It shouldn’t be this hard to get the money you make working,” the 23-year-old told the Associated Press.

Fonseca is part of a growing number of frustrated Cubans who have to face yet another obstacle as they navigate the island’s already complicated monetary system: a lack of cash.

In Havana, long queues start to form from the early hours of the day in front of banks and ATMs in the capital Havana. Residents report that they cannot find enough banknotes to pay for routine operations, such as purchasing basic foods.

Experts say there are several reasons behind the shortage, but they are all related to the deep economic crisis that Cuba faces, one of the worst in decades.

Omar Everleny Pérez, a Cuban economist and university professor, says the main culprits are:

• Government’s growing fiscal deficit;
• No banknotes exceeding 1,000 Cuban pesos, which on the parallel market are equivalent to around US$3 (R$15);
• High inflation;
• Retention of banknotes by businesspeople.

“There is money, yes, but not in the banks”said Pérez, adding that the most of the money is in the possession not of salaried workers, but of entrepreneurs and owners of small and medium-sized businesses who are more likely to collect money from commercial transactions, but are reluctant to return money to banks.

This occurs, according to Pérez, either because these businesspeople do not trust local banks or simply because they need the Cuban pesos to be converted into foreign currency.

Most entrepreneurs and small business owners in Cuba have to import almost everything they sell or pay in foreign currency for supplies needed to run their businesses.

As a consequence, Many end up accumulating Cuban pesos and then exchanging them for foreign currency in the informal market. Converting these Cuban pesos to other currencies represents yet another challenge, as there are multiple 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 be worth up to 350 Cuban pesos in the informal market.

Pérez notes that in 2018, 50% of the money in circulation was in the hands of the Cuban population and the other half in Cuban banks. But in 2022, the last year for which information is available, 70% of the money was in private wallets.

When contacted by AP, Cuban monetary authorities did not comment on the crisis until the publication of this report.

The cash shortage comes at a time when Cubans face a complex monetary systemin which several currencies circulate, including a virtual currency, the MLCcreated in 2019.

In 2023, the government announced several measures aimed at promoting a “cashless society”, making it mandatory to use credit cards to pay for some transactions – including purchases of food, fuel and other basic goods. But many companies simply refuse to accept the cards.

To make matters worse, the country’s inflation is high, which means that more and more physical accounts are needed to buy products.

According to official data, the inflation stood at 77% in 2021then dropped to 31% in 2023.

But for the average Cuban, official numbers do not reflect the reality of their lives, since Market inflation can reach up to three digits in the informal economy. For example, a carton of eggs, sold for 300 Cuban pesos in 2019, today sells for around 3,100 pesos.

At the same time, the monthly salary of Cuban public employees varies between 5,000 and 7,000 Cuban pesos, between US$14 and 20 dollars (between R$70 and R$100).

“Living in an economy that, in addition to having several currencieshe has various exchange rates is triple-digit inflation It’s quite complicated,” said Pavel Vidal, an expert on Cuba and professor at the Universidad Javeriana de Cali, in Colombia.