HAVANA (AP) — Alejandro Fonseca stood in line for a number of hours exterior a financial institution in Havana hoping to withdraw Cuban pesos from an ATM, however when it was virtually his flip, the money ran out. He angrily hopped on his electrical tricycle and traveled a number of kilometers to a different department the place he lastly managed to withdraw some cash after losing all the morning.
“It shouldn’t be so tough to get the cash you earn by working,” the 23-year-old informed The Related Press in a current interview.
Fonseca is certainly one of an growing variety of annoyed Cubans who should grapple with yet one more hurdle whereas navigating the island’s already sophisticated financial system — a scarcity of money.
Lengthy queues exterior banks and ATM’s within the capital, Havana, and past begin forming early within the day as individuals search money for routine transactions like shopping for meals and different necessities.
Specialists say there are a number of causes behind the scarcity, all one way or the other associated to Cuba’s deep financial disaster, one of many worst in many years.
Omar Everleny Pérez, a Cuban economist and college professor, says the primary culprits are the federal government’s rising fiscal deficit, the nonexistence of banknotes with a denomination larger than 1,000 Cuban pesos (about $3 within the parallel market), stubbornly excessive inflation and the non-return of money to banks.
“There may be cash, sure, however not within the banks,” mentioned Pérez, including that many of the money is being held not by salaried employees, however by entrepreneurs and homeowners of small- and medium-size enterprise who usually tend to gather money from business transactions however are reluctant to return the cash to the banks.
This, Pérez says, is both as a result of they don’t belief the native banks or just because they want the Cuban pesos to transform into overseas foreign money.
Most entrepreneurs and small enterprise homeowners in Cuba should import virtually every thing they promote or pay in overseas foreign money for the provides wanted to run their companies. As a consequence, many find yourself hoarding Cuban pesos to later grow to be overseas foreign money on the casual market.
Changing these Cuban pesos to different currencies poses yet one more problem, as there are a number of, extremely fluctuating trade charges within the island.
For instance, the official price utilized by authorities industries and companies is 24 pesos to the U.S. greenback, whereas for people, the speed is 120 pesos to the greenback. Nevertheless, the greenback can fetch as much as 350 Cuban pesos on the casual market.
Pérez notes that in 2018, 50% of the money in circulation was within the fingers of the Cuban inhabitants and the opposite half in Cuban banks. However in 2022, the newest 12 months for which data is accessible, 70% of money was within the wallets of people.
Cuban financial authorities didn’t instantly reply to AP’s emailed request for remark.
The scarcity of money comes as Cubans grapple with a fancy financial system by which a number of currencies flow into, together with a digital foreign money, MLC, created in 2019.
Then, in 2023 the federal government introduced a number of measures aimed toward selling a “cashless society,” making using bank cards obligatory to pay for some transactions — together with purchases of meals, gas and different primary items — however many companies merely refuse to simply accept them.
Making issues worse is stubbornly excessive inflation, which means increasingly bodily payments are wanted to purchase merchandise.
In keeping with official figures, inflation stood at 77% in 2021, then dropped to 31% in 2023. However for the common Cuban, the official figures barely replicate the fact of their lives, since market inflation can attain as much as three digits on the casual market. For instance, a carton of eggs, which bought for 300 Cuban pesos in 2019, nowadays sells for about 3,100 pesos.
All whereas the month-to-month wage for Cuban state employees ranges between 5,000 and seven,000 Cuban pesos (between $14 and $20 within the parallel market).
“To dwell in an economic system that, along with having a number of currencies, has a number of trade charges and a three-digit inflation is kind of sophisticated,” mentioned Pavel Vidal, a Cuba professional and professor at Colombia’s Javeriana College of Cali.
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Andrea Rodríguez on X: www.twitter.com/ARodriguezAP
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