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<p>An increasing number of people in Cuba are grappling with a severe&nbsp;shortage of cash&nbsp;for routine transactions such as buying food and other essentials.&nbsp;A&nbsp;report by the&nbsp;news agency Associated Press early Sunday (Apr 28)&nbsp;said that long lines were seen outside banks and ATMs in the capital city of Havana.&nbsp;Experts have said that there are several reasons behind the cash shortage&nbsp;and&nbsp;all&nbsp;somehow are&nbsp;related to the&nbsp;country's&nbsp;economic crisis,&nbsp;which is&nbsp;one of the worst in decades.</p>

<p>Twenty-three-year-old&nbsp;Alejandro Fonseca stood in line for several hours outside a bank in Havana&nbsp;hoping&nbsp;to withdraw money from an ATM. But when it was almost his turn, the cash ran out.</p>

<p><strong>Also read |&nbsp;<a href="https://www.wionews.com/world/cuba-accuses-us-of-stoking-protests-amid-blackouts-and-food-shortages-summons-top-diplomat-701725">Cuba accuses US of stoking protests amid blackouts and food shortages, summons top diplomat</a></strong></p>

<p>Fonseca then travelled several kilometres to another&nbsp;branch&nbsp;where&nbsp;he finally managed to withdraw some money after wasting the entire morning.&nbsp;"It&nbsp;shouldn’t&nbsp;be so difficult to get the money you earn by working,"&nbsp;he told the Associated Press.&nbsp;</p>

<h2><strong>What are the reasons behind cash shortage?</strong></h2>

<p>According to Cuban economist Omar&nbsp;Everleny Perez, the main reasons behind the shortage are&nbsp;the&nbsp;government’s&nbsp;growing fiscal deficit, the nonexistence of banknotes with a denomination greater than 1,000 Cuban pesos (about $3 in the parallel market), stubbornly high inflation, and the non-return of cash to banks.</p>

<p>“There is money, yes, but not in the banks,”&nbsp;Perez told the news agency. The economist pointed out that most of the cash&nbsp;is being held not by salaried&nbsp;workers,&nbsp;but by entrepreneurs and owners of small- and medium-sized businesses who are more likely to collect cash from commercial transactions but are reluctant to return the money to the banks.</p>

<h2><strong>Hoarding up of pesos</strong></h2>

<p>A majority of&nbsp;entrepreneurs and small business owners in Cuba&nbsp;have to import almost everything they sell or pay in foreign currency for the supplies needed to run their businesses.</p>

<p>As a consequence,&nbsp;&nbsp;many end up hoarding Cuban pesos to later change into foreign currency on the informal market.&nbsp;Converting those Cuban pesos to other currencies poses yet another challenge, as there are&nbsp;several,&nbsp;highly fluctuating exchange rates on the island, the report further said.&nbsp;</p>

<p><strong>Also watch |&nbsp;Cuba: US trade embargo, sanctions trigger food &amp; medicine shortage</strong></p>

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<p>Currently,&nbsp;the official rate used by government industries and agencies is 24 pesos to the US&nbsp;dollar, while for individuals, the rate is 120 pesos to the dollar. However, the dollar can fetch up to 350 pesos on the informal market.</p>

<p>Perez said that in 2018,&nbsp;50 per cent&nbsp;of the cash in circulation was in the hands of the Cuban population and the other half in banks. But in 2022, the latest year for which information is available, 70 per cent&nbsp;of cash was in&nbsp;the wallets of individuals.</p>

<p><em>(With inputs from agencies)</em></p>


An increasing number of people in Cuba are grappling with a severe shortage of cash for routine transactions such as buying food and other essentials. A report by the news agency Associated Press early Sunday (Apr 28) said that long lines were seen outside banks and ATMs in the capital city of Havana.

An increasing number of people in Cuba are grappling with a severe shortage of cash for routine transactions such as buying food and other essentials. A report by the news agency Associated Press early Sunday (Apr 28) said that long lines were seen outside banks and ATMs in the capital city of Havana. Experts have said that there are several reasons behind the cash shortage and all somehow are related to the country's economic crisis, which is one of the worst in decades. Twenty-three-year-old Alejandro Fonseca stood in line for several hours outside a bank in Havana hoping to withdraw money from an ATM. But when it was almost his turn, the cash ran out. Also read | Cuba accuses US of stoking protests amid blackouts and food shortages, summons top diplomat Fonseca then travelled several kilometres to another branch where he finally managed to withdraw some money after wasting the entire morning. "It shouldn’t be so difficult to get the money you earn by working," he told the Associated Press. What are the reasons behind cash shortage? According to Cuban economist Omar Everleny Perez, the main reasons behind the shortage are the government’s growing fiscal deficit, the nonexistence of banknotes with a denomination greater than 1,000 Cuban pesos (about $3 in the parallel market), stubbornly high inflation, and the non-return of cash to banks. “There is money, yes, but not in the banks,” Perez told the news agency. The economist pointed out that most of the cash is being held not by salaried workers, but by entrepreneurs and owners of small- and medium-sized businesses who are more likely to collect cash from commercial transactions but are reluctant to return the money to the banks. Hoarding up of pesos A majority of entrepreneurs and small business owners in Cuba have to import almost everything they sell or pay in foreign currency for the supplies needed to run their businesses. As a consequence, many end up hoarding Cuban pesos to later change into foreign currency on the informal market. Converting those Cuban pesos to other currencies poses yet another challenge, as there are several, highly fluctuating exchange rates on the island, the report further said. Also watch | Cuba: US trade embargo, sanctions trigger food & medicine shortage × Currently, the official rate used by government industries and agencies is 24 pesos to the US dollar, while for individuals, the rate is 120 pesos to the dollar. However, the dollar can fetch up to 350 pesos on the informal market. Perez said that in 2018, 50 per cent of the cash in circulation was in the hands of the Cuban population and the other half in banks. But in 2022, the latest year for which information is available, 70 per cent of cash was in the wallets of individuals. (With inputs from agencies)

Cash crisis in Cuba: Long queues outside banks amid severe peso shortage

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Cash crisis in Cuba: Long queues outside banks amid severe peso shortage