HAVANA (AP) — Alejandro Fonseca stood in line for a number of hours outdoors 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 the whole morning.
“It shouldn’t be so tough to get the cash you earn by working,” the 23-year-old Fonseca instructed The Related Press in a latest interview.
Fonseca is one in every of an growing variety of annoyed Cubans who should grapple with one more hurdle whereas navigating the island’s already difficult financial system — a scarcity of money.
Lengthy strains outdoors banks and ATMs 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.
Consultants say there are a number of causes behind the scarcity, all someway 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 principle culprits are the federal government’s rising fiscal deficit, the nonexistence of banknotes with a denomination better than 1,000 Cuban pesos (about $3 within the parallel market), stubbornly excessive inflation and the nonreturn 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 staff, however by entrepreneurs and house owners of small- and medium-size enterprise who usually tend to accumulate 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 house owners in Cuba should import virtually every little 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 become overseas foreign money on the casual market.
Changing these Cuban pesos to different currencies poses one more problem, as there are a number of, extremely fluctuating trade charges within the island.
For instance, the official fee utilized by authorities industries and businesses 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 arms of the Cuban inhabitants and the opposite half in banks on the Caribbean island. However in 2022, the newest yr for which data is out there, 70% of money was within the wallets of people.
Cuban financial authorities didn’t instantly reply to the AP’s emailed request for remark.
The scarcity of money comes as Cubans grapple with a fancy financial system wherein a number of currencies flow into, together with a digital foreign money, MLC, which was created in 2019.
Then, in 2023 the federal government introduced a number of measures aimed toward selling a “cashless society,” making the usage of bank cards necessary to pay for some transactions — together with purchases of meals, gasoline and different fundamental items — however many companies merely refuse to just accept them.
Making issues worse is stubbornly excessive inflation, that means increasingly bodily payments are wanted to purchase merchandise.
In line 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 truth of their lives, since market inflation can attain as much as three digits on the casual market. For instance, a carton of eggs, which offered for 300 Cuban pesos in 2019, as of late sells for about 3,100 pesos.
The month-to-month wage for Cuban state staff ranges between 5,000 and seven,000 Cuban pesos (between $14 and $20 within the parallel market).
“To reside in an financial system that, along with having a number of currencies, has a number of trade charges and a three-digit inflation is kind of difficult,” mentioned Pavel Vidal, a Cuba skilled 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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Comply with AP’s protection of Latin America and the Caribbean at https://apnews.com/hub/latin-america
