The streets of Havana are lined with people in a sight that’s become increasingly common—long queues snaking outside banks and ATMs. Among them is Alejandro Fonseca, a young Cuban who recently experienced the trials of cash withdrawal in a struggling economy. Fonseca spent several hours outside a bank, inching ever closer to an ATM that emptied just as his turn approached. Out of frustration, he journeyed on his electric tricycle to another bank, eventually obtaining cash after a morning’s waste.
“It shouldn’t be so difficult to get the money you earn by working,” the 23-year-old expressed in an interview with The Associated Press, encapsulating the sentiment of many Cubans facing the same dilemma.
The inconvenience Fonseca faces is symptomatic of a grave issue—Cuba’s acute cash shortage, compounded by an already complex monetary system. Residents start their day in pursuit of cash necessary for basic transactions, yet their endeavours are frequently marred by empty ATMs and understocked banks.
Omar Everleny Pérez, a preeminent Cuban economist and lecturer, attributes the cash scarcity to a confluence of factors all intersected by the nation’s dire economic crisis, one of the worst witnessed in recent history. A mounting fiscal deficit, the absence of banknotes larger than 1,000 Cuban pesos (roughly equal to $3 on the parallel market), soaring inflation rates, and the people’s distrust in banks, opting instead to retain hard currency at home, build the foundations of this crisis.
This behavior has shifted the cash flow dynamic significantly. While in 2018, the currency in circulation was distributed evenly between the populace and financial institutions, by 2022, individuals held 70% of the cash, exacerbating the shortage. Cuban monetary authorities, when reached out to for comments, did not provide immediate responses.
The scarcity is particularly stifling for local entrepreneurs and small business operators who, due to import predilections and the frequent need to deal in foreign currencies, accrue Cuban pesos to interchange on the black market. The unofficial exchange realm presents another hurdle, with fluctuating rates differing starkly from the official benchmarks—24 pesos per US dollar for government transactions and 120 pesos for individuals, while the same dollar might command as high as 350 pesos on the streets.
Moreover, the Cuban government is nudging the populace towards a “cashless society,” mandating credit card use for certain transactions such as purchasing food and fuel. But the buy-in from businesses is low, with many refusing to accept card payments. The move appears ambitious against a backdrop of spiraling inflation, with official figures reporting 77% in 2021 before dropping to 31% in 2023. However, to the average Cuban, this hardly mirrors their reality, wherein a carton of eggs that sold for 300 pesos in 2019 now demands a staggering 3,100 pesos.
Cubans also grapple with a multi-currency system that includes a virtual currency, the MLC, introduced in 2019. The multitude of currencies, disparate exchange rates, and hyperinflation paints a portrait of an economy enigmatic and challenging to navigate, as highlighted by Pavel Vidal, a Cuba expert and academic from Javeriana University of Cali.
To put the economic strain into perspective, the state worker’s monthly income fluctuates between 5,000 and 7,000 Cuban pesos, translating to a mere $14 to $20 in the parallel market—a sum hardly sufficient to cover the soaring costs driven by inflation.
As Cuba undergoes its most protracted economic turmoil in years, hindered further by global financial dynamics and internal policies, the image of citizens like Fonseca waiting for hours to access their hard-earned wages becomes a symbol of the nation’s larger struggle, one that is felt on the bustling streets and within the quiet desperation of its people’s lives.
