A carton of eggs that sold for 300 Cuban pesos in 2019 now sells for about 3,100 pesos. State workers earn between 5,000 and 7,000 Cuban pesos monthly (between $14 and $20)
Alejandro Fonseca, a Cuban citizen, expressed his frustration after spending hours in line at a bank in Havana only to find the ATM had run out of cash just as he was about to withdraw.
He said “It shouldn’t be so difficult to get the money you earn by working.” This 23-year-old’s experience is becoming increasingly common in Cuba, where long queues outside banks and ATMs are a daily occurrence due to a severe cash shortage.
Experts attribute this crisis to several factors, all linked to Cuba’s deep economic woes, one of the worst in decades. Omar Everleny Perez, a Cuban economist and university professor, points to the government’s growing fiscal deficit, the lack of banknotes with a denomination greater than 1,000 Cuban pesos (about $3), stubbornly high inflation and the nonreturn of cash to banks as the main causes.
“There is money, yes, but not in the banks,” Perez remarked, pointing out that most of the cash is in the hands of entrepreneurs and small to medium-sized business owners who often collect cash from commerce but are hesitant to deposit their earnings into banks. The reasons for this reluctance, according to Perez, range from distrust in local banking systems to the requirement for Cuban pesos to convert into foreign currency.
In Cuba, the majority of entrepreneurs and small-scale business owners rely heavily on imports for their goods or must pay in unfamiliar currencies for necessary supplies. This results in many hoarding Cuban pesos with the intent of exchanging them for foreign money through informal avenues.
The conversion process poses its own predicaments due to the varying, and often fluctuating, exchange rates on the island. Government industries and agencies operate on an official rate of 24 pesos to the US dollar, however, for individuals, the rate spikes to 120 pesos per dollar.
In more informal settings, a US dollar could fetch up to 350 Cuban pesos. In revisiting 2018 figures, Perez also noted that half of the circulating cash was held by the Cuban population and the remaining money was bank-held. However, in the latest data available, from the year 2022, a staggering 70% of the cash was found within individuals’ wallets.
At the time of this reporting, there has been no immediate response from Cuban monetary authorities to requests for comment. Cubans are struggling with a shortage of cash as they navigate a complex monetary system that includes several currencies, including a virtual currency, MLC, introduced in 2019.
In 2023, the government announced measures to promote a “cashless society,” making credit card payments mandatory for some transactions, including food, fuel and other basic goods. However, many businesses simply refuse to accept them. The situation is exacerbated by high inflation, requiring more physical bills to purchase products.
Official figures put inflation at 77% in 2021, dropping to 31% in 2023. But for the average Cuban, these figures don’t reflect their reality, as market inflation can reach triple digits on the informal market. For instance, a carton of eggs that sold for 300 Cuban pesos in 2019 now sells for about 3,100 pesos. State workers earn between 5,000 and 7,000 Cuban pesos monthly (between $14 and $20 in the parallel market).
“To live in an economy that, in addition to having several currencies, has several exchange rates and a three-digit inflation is quite complicated,” said Pavel Vidal, a Cuba expert and professor at Colombia’s Javeriana University of Cali.