By Amado Viera<\/a><\/p>\nHAVANA TIMES \u2013 The five-day \u201cbank freeze\u201d that Banco Metropolitano (Banmet) attempted to impose on savers in Havana\u2014justifying it by claiming that power outages prevented cash withdrawals\u2014lasted only five days. Strangely enough, the blackouts did not seem to affect other banking services, such as opening accounts or issuing loans and cashier\u2019s checks, which, according to an official Banmet statement issued on June 26, would continue without interruption.<\/p>\n
\u201cThis is a full-fledged banking freeze. If the problem were really the electricity, the bank wouldn\u2019t be able to carry out any operations. But they only suspended cash withdrawals\u2014and that money doesn\u2019t belong to the bank, it belongs to us,\u201d journalist Ernesto Ustariz wrote on his Facebook profile. As might be expected, his concerns never appeared in Tribuna de La Habana, the newspaper where he works, which, true to its role as the \u201cOfficial Organ of the Provincial Committee of the Communist Party\u201d in the capital, avoided questioning the measure.<\/p>\n
Only the unanimous outrage of Banmet customers, who flooded social media with complaints, succeeded in forcing the institution to reverse course. On July 1, it resumed scheduling appointments for cash withdrawals. In the brief announcement acknowledging the reversal, the electricity crisis was mentioned only in passing\u2014an inadvertent admission that it had merely been a pretext.<\/p>\n
In fact, while the moratorium remained in effect, the country\u2019s electricity situation had not changed significantly. Even the reconnection of the Antonio Guiteras power plant\u2014the country\u2019s largest generating unit\u2014on June 28 had no noticeable impact on the blackout schedule. As in the preceding weeks, Havana continued to endure daily outages lasting between 12 and 18 hours, while the provinces suffered blackouts of 20 to 30 consecutive hours.<\/p>\n
Digital Inflation<\/p>\n
Throughout history, the most common image associated with inflation has been people carrying around huge amounts of cash just to get through daily life. Only a few years ago, shopping in Venezuela required thick bundles of bol\u00edvars. In Somaliland, an unrecognized state in Africa, the currency has become so devalued that people think of its value by weighing bags of the currency rather than by counting individual bills.<\/p>\n
These are extreme situations that many Cubans would actually envy. For Omar Urquiza, having all of his money in cash\u2014even if it meant handling enormous sums\u2014would be a blessing. A 71-year-old retiree from Camag\u00fcey, he has been unable to collect his pension since January because of the lack of cash at banks in Nuevitas, the municipality where he lives.<\/p>\n
He recounted his experience during a call to a news program on Radio Cadena Agramonte, Camag\u00fcey\u2019s provincial radio station.<\/p>\n
\u201cI depend on help from my children and on whatever money I can earn doing odd jobs, like cleaning yards or running errands. It\u2019s very sad not to be able to withdraw the \u2018few pesos\u2019 I earned after working almost my entire life. I\u2019ve lost count of how many times I\u2019ve been unable to buy something simply because I didn\u2019t have cash, even though I have the money on my bank card.\u201d<\/p>\n
Many other elderly people, he noted, have neither family support nor the health to continue working. For some, even traveling to the bank is an enormous burden because of health problems or the distance from the neighborhoods where they live.<\/p>\n
\u201cWe urgently need to find solutions to this problem, which has only grown worse over time,\u201d Manuel Fernandez, president of the Municipal Assembly of People\u2019s Power (mayor) of Nuevitas, acknowledged on the same radio program.<\/p>\n
\u201cWe are coordinating with the new economic actors [private businesses] so that some of our retirees can collect their pensions through them. We have also worked with the bank so that elderly people receive priority on the days pension payments are made.\u201d<\/p>\n
Even so, he admitted that the amount of cash available is insufficient to cover everyone\u2019s pension payments.<\/p>\n
Unlike Havana\u2014the only province where Banco Metropolitano operates and where cash withdrawals are still possible generally capped at between 5,000 and 10,000 pesos, (the equivalent of roughly US $8 to US $16, per person per day)\u2014cash withdrawals in the rest of the country have long since ceased to function normally.<\/p>\n
Barbara Salcedo, a seamstress at a shirt factory in the city of Camag\u00fcey, believes that \u201cthe situation has gotten worse with every passing month.\u201d<\/p>\n
At this time last year, banks allowed withdrawals of up to 2,000 pesos a day per person. Then the limit was lowered to 1,000, and a few months ago it was reduced again to just 500 pesos [less than one US dollar]. The worst came in April, when they suspended cash withdrawals altogether. The justification is that the available cash is now reserved for retirees and the \u2018vulnerable\u2019 [people living in extreme poverty, the disabled, and others].\u201d<\/p>\n
Unable to convert the salary she receives by bank transfer from her state job into cash, B\u00e1rbara now depends entirely on the sewing jobs she takes on at home.<\/p>\n
\u201cFixing shirts and dresses earns me much more than I make at the factory. We\u2019ve barely been working there for months because of the blackouts and the lack of raw materials. I haven\u2019t quit because I\u2019m almost at retirement age, and I don\u2019t want to lose my pension,\u201d she confessed.<\/p>\n
Anyone unfamiliar with the Cuban context might wonder why people on the island are so desperate to obtain cash.<\/p>\n
The answer could not be simpler: because virtually all private businesses\u2014and many state-run ones\u2014refuse to accept bank transfers. The main reason is straightforward. Money held in bank accounts is of little use when it comes to buying supplies, foreign currency, or carrying out many other basic business transactions.<\/p>\n
\u201cRight now I have more than one million pesos sitting on a bank card, and I\u2019m going crazy trying to convert it into cash because without cash I can\u2019t buy from any supplier. But the money changers no longer accept commissions of 10 or even 15 percent. Just yesterday one told me he wouldn\u2019t touch digital pesos for less than a 20 percent commission. At what prices am I supposed to sell my products if I have to cover my costs, taxes, and those commissions? The best part is that the State washes its hands of the problem while encouraging people to turn against us, report us, and boycott us. I wonder what moral authority it has to do that when it\u2019s the State itself that either hasn\u2019t known how\u2014or hasn\u2019t wanted\u2014to bring order to this whole situation. If tomorrow the State told me, \u2018We\u2019ll sell you everything you need through bank transfers,\u2019 I\u2019d be the first to accept only digital payments. But that\u2019s not the reality we\u2019re living in,\u201d the owner of a restaurant-caf\u00e9 in Camag\u00fcey told me.<\/p>\n
The cash shortage gripping Cuba is the result of the relentless devaluation of the national currency and of the new forced banking policy imposed in August 2023 without regard for the country\u2019s actual conditions.<\/p>\n
Since the beginning of this year, the peso has lost nearly one-fifth of its value against the US dollar. If the comparison goes back to January 2021\u2014when the government embarked on the failed economic reform known as the Ordering Task\u2014the decline is even more dramatic.<\/p>\n
Over the past five years, the exchange rate has gone from 24 pesos per US dollar to nearly 700 pesos per dollar. Aside from occasional periods of market stabilization, there is no sign that this trend will reverse.<\/p>\n
As ever larger amounts of Cuban pesos became necessary to buy foreign currency\u2014a large portion of the economy has been \u201cdollarized\u201d by the government\u2014the shortage of banknotes became increasingly severe.<\/p>\n
To confront the problem, the authorities launched the Banking program, which essentially sought to replace cash with digital money. It seemed to matter little that even a basic smartphone cost more than a year\u2019s worth of minimum wages, or that blackouts in the interior of the country were already lasting more than 12 hours a day, severely disrupting digital payment platforms.<\/p>\n
Three years later, it is difficult to imagine a worse situation.<\/p>\n
\u201cI propose that the National Bank of Cuba head the blacklist\u2026 it\u2019s a chain reaction. If the bank doesn\u2019t provide cash, private businesses can\u2019t keep operating. It\u2019s that simple,\u201d Mailet Padilla, owner of a clothing and footwear store in Camag\u00fcey, replied sarcastically after a radio station director denounced a pizzeria for refusing to accept bank transfers.<\/p>\n
The worst part is that, to a certain extent, both sides are right.<\/p>\n
Customers should not be turned away because they choose one form of payment over another. Nor should businesses be unable to access the money they have deposited in banks.<\/p>\n
Yet both absurdities have become routine in Cuba. And all indications are that they will remain so.<\/p>\n
Read more from Cuba here on Havana Times.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"At the start of the obligatory digital banking, Cuba had just under a thousand ATMs, with 60% of…\n","protected":false},"author":2,"featured_media":743485,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101],"class_list":["post-743484","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/743484","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=743484"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/743484\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/743485"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=743484"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=743484"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=743484"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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At the start of the obligatory digital banking, Cuba had just under a thousand ATMs, with 60% of them located in Havana. Today, only a small percentage remain in operation.<\/p>\n