Havana, Cuba – Alejandro Fonseca, a 23-year-old resident of Havana, recently experienced the frustrations of trying to withdraw money from an ATM in Cuba. After waiting in line for hours, the cash ran out just as he was about to access it. This led to him traveling several kilometers to another bank branch to finally withdraw his money, resulting in a wasted morning.
Fonseca’s struggle is not unique in Cuba, where a shortage of cash has become a growing concern for many residents. Long queues can be seen outside banks and ATMs in Havana and beyond as people seek cash for routine transactions like buying food and other essentials.
Experts attribute the cash shortage to various factors related to Cuba’s deep economic crisis. Cuban economist Omar Everleny Pérez cites the government’s fiscal deficit, the absence of banknotes with higher denominations, high inflation rates, and the reluctance of entrepreneurs and business owners to return cash to banks as key contributors to the problem.
Many entrepreneurs and small business owners in Cuba rely on importing goods and supplies in foreign currency, leading them to hoard Cuban pesos for later conversion on the informal market. This practice contributes to the imbalance in cash distribution, with more money ending up in the pockets of individuals rather than in the banks.
The complexity of Cuba’s monetary system, which includes multiple currencies and exchange rates, further complicates the situation for residents. Inflation rates, although officially reported at lower levels, can reach triple digits in the informal market, driving up the cost of basic goods and services for the average Cuban.
In response to the challenges posed by the cash shortage and inflation, the Cuban government announced measures to promote a “cashless society” in 2023, mandating the use of credit cards for certain transactions. However, many businesses remain hesitant to adopt this shift, exacerbating the difficulties faced by Cuban citizens in accessing and using cash for daily needs.
Living in an economy with multiple currencies, fluctuating exchange rates, and high inflation rates presents a significant challenge for Cuban residents. As they navigate these complexities, the shortage of cash continues to impact everyday transactions and financial stability for many on the island.