2LT International News

HAVANA, Cuba: As Cubans seek more cash for everyday transactions, such as buying food and other essentials, long lines have been forming outside banks and ATMs in the capital, Havana, and other areas in recent days.

The cash shortage is reported to be related to Cuba’s economic crisis, one of the worst in decades.

Cuban economist and university professor Omar Everleny Perez said the main reasons for the shortage are the country’s growing fiscal deficit, a lack of banknotes worth more than 1,000 Cuban pesos (some US$3 in the parallel market), stubbornly high inflation, and cash not being returned to banks.

“There is money, yes, but not in the banks,” Perez said.

He added that most cash is held not by salaried workers but by entrepreneurs and owners of small and medium-sized enterprises who are reluctant to return money to the banks.

He further added that most of the items they sell must be imported into Cuba by entrepreneurs and small business owners, who pay in foreign currency for the supplies needed to run their businesses. Therefore, many decide to hoard Cuban pesos to later exchange into foreign currency on the informal market.

In 2018, 50 percent of cash in circulation was in the hands of the Cuban population and the other half in banks in the Caribbean nation, but in 2022, 70 percent of cash was in the wallets of individuals, Perez said.

In addition to the cash shortage, Cubans are struggling with a complicated monetary system with several currencies in circulation, as well as stubbornly high inflation, meaning more and more physical bills are needed to buy products.

Official figures showed that inflation on the island was 77 percent in 2021, dropping to 31 percent in 2023. But for average Cubans, these official figures do not reflect reality, with market inflation reaching up to three digits on the informal market.

Cuban state workers earn an average monthly salary of between 5,000 and 7,000 Cuban pesos, or between $14 and $20 in the informal market.