This week Cubans woke up to new currency restrictions, limiting what they can withdraw from a bank or ATM.Already struggling with food and medicine shortages, power outages and runaway inflation, the government's currency move throws more fuel on a dangerous situation. It is one that many fear will only get worse.Cuba is not the only nation struggling with economic issues and poor financial management — one only has to look at the administration of Prime Minister Justin Trudeau in Canada.Much like Cubans, and to a lesser degree, Canadians are worried about the high cost of fuel at the gas pumps due to carbon taxes, the soaring cost of food at the grocers, and the severe lack of housing due to mass immigration.More and more people in Canada, are lining up at food banks, and the PMO seems to be totally out of touch — ironically, much like Cuba, blaming everyone but themselves for the current problems.Could it happen here — are we headed for similar woes?There is a simple economic rule, and it goes for everyone: When people who don't know how to handle money are in charge, things are bound to get bungled up.Case in point, just this past week, Cuba's government and independent online news site El Toque exchanged blows after state-run media accused the website of manipulating the black market currency exchange rate to impoverish Cubans and stoke unrest, Reuters reported.The El Toque site (eltoque.com) has enraged the administration of Cuban President Miguel Diaz-Canel by publishing a rate in Cuban pesos for the greenback far higher than the two official levels set by his government, the report said.Cuba's state-run media this week ratcheted up its long-running criticism of El Toque, claiming the site's currency tracker — by far the most widely used on the island — amounts to "financial terrorism."El Toque defends its online exchange rate tracker, saying Cuba's allegations are "ridiculous and implausible," Reuters reported."The Communist Party has decided to convert our platform, El Toque, into a scapegoat to justify its failure," El Toque's Miami-based editor-in-chief, Jose Jasan Nieves, said in a message sent by email to readers.The official Cuban government response is in keeping with blaming everyone, including alleged corrupt officials, instead of themselves.Many Cubans feel it is not corrupt individuals, but a corrupt, dysfunctional system — one that they have lost faith in.The spat over the currency tracker comes as Cuba's peso currency has lost nearly half its value against the dollar in 2024 alone, according to El Toque, a devastating freefall that has slashed the buying power of Cubans already rattled by economic crisis, inflation and shortages, Reuters reported.The situation has now worsened, by a shortage of cash pesos — which Cubans, and Cuban business are hoarding, and not putting into banks.“There is money, yes, but not in the banks,” Omar Everleny Pérez, a Cuban economist and university professor, told Associated Press..Most of the cash is being held not by salaried workers, but by entrepreneurs and owners of small- and medium-size business who are more likely to collect cash from commercial transactions but are reluctant to return the money to the banks, said Perez.Rampant inflation is also pummelling the island nation.The monthly salary for Cuban state workers has ranged between 5,000 and 7,000 Cuban pesos (between $14 and $20 in the parallel market).As of yesterday, my Cuban sources in Miami told me that same Cuban monthly salary is now worth between US $4-$5, a massive tumble. Having to withdraw only a portion of it, will only bring more hardship.According to official figures, inflation stood at 77% in 2021, then dropped to 31% in 2023. But for the average Cuban, the official figures barely reflect the reality of their lives, since market inflation can reach up to three digits on the informal market, AP reported.Cuba, which imports around 70 percent of its food, has seen food prices soar. For example, a carton of eggs, which sold for 300 Cuban pesos in 2019, these days sells for about 3,100 pesos.Cuba's complex monetary system also includes a virtual currency, MLC, which was created in 2019, as it promoted a "cashless society," making credit cards mandatory to pay for some transactions, AP reported.This effort also fell flat, as many businesses simply refused to accept them. Cash or no sale.Worsening the situation, there are growing shortages. Even cigars, once representative of Cuba's national strength, were not available in some 5-star Havana hotels early this year.Hospitals have literally run out of oxygen and basic medicines. And people begging for change, once a rarity in Havana, is now commonplace.Cuban cab drivers are now demanding US$20 to drive a single mile, as fuel prices have jumped fivefold via a government price hike in March.Naturally, restaurant prices have also soared ... I would even say, quadrupled. All I can say is, bring US dollars.The Cuban advantage is no more, it doesn't exist. It is just as expensive, or even more expensive, than any other island resort nation..On my last visit in February, I was handing out new packages of Tylenol as tips instead of cash — they were treated as if they were gold.Visitors to Cuba should know that even the basic medicines are in short supply, and carrying some extra meds to give away, is permitted.Where did it all go wrong for Cuba?According to the Council on Foreign Relations, Cuba’s centrally planned economy has been mired by stagnation for decades. But over the past five years, the pillars propping up the island’s already feeble economy collapsed one by one, sending it into a tailspin.First, Venezuela’s socialist autocracy, which had lavished cheap oil on Cuba, saw oil output diminish under that regime’s mismanagement, thus cutting down on Cuba’s energy supply.Next, conservative and right-wing governments, such as those of Brazilian President Jair Bolsonaro and Colombian President Iván Duque, won office across Latin America and ended exploitative arrangements under which Cuba sent medics abroad and garnered most of their wages.And in the United States, President Donald Trump tightened sanctions in place for decades and cut off remittances to the island. Then came the COVID-19 pandemic, which was poorly handled by President Díaz-Canel, a lifelong Communisty Party insider who succeeded Raul Castro, brother of famed revolutionary Fidel Castro.Cuba’s 2020 border closure decimated tourism and contributed to the second-largest economic contraction in Latin America that year, after Venezuela’s, the Council on Foreign Relations reported.But Cuba, unlike its Caribbean neighbors, never saw tourism fully rebound.And although Cuba pivoted to allowing some forms of small private businesses in 2021, progress on additional market reforms has stalled.As a result, Cubans no longer have any faith in their politicians, and any sign of dissent is being quashed by the military — more beatings, more arrests, and more people being tossed into jail.With Cuba’s repressive, one-party system closing all routes to bottom-up change, Cubans are more likely to continue voting with their feet as they seek to escape economic chaos and repression. Hundreds of thousands of Cubans have left the island, including many of the younger generation, who see no future if they stay.A cab driver who took us to Hemingway's home outside Havana, admitted to me that he had a brother in Spain and another in the US.Why haven't you left, I asked.His parents have refused to leave, he said, and he is sticking by them — knowing full well, his life will probably never get any better.We had beers after, but the look on his face told me all I needed to know. Desperation is growing, and that can only lead to trouble.
This week Cubans woke up to new currency restrictions, limiting what they can withdraw from a bank or ATM.Already struggling with food and medicine shortages, power outages and runaway inflation, the government's currency move throws more fuel on a dangerous situation. It is one that many fear will only get worse.Cuba is not the only nation struggling with economic issues and poor financial management — one only has to look at the administration of Prime Minister Justin Trudeau in Canada.Much like Cubans, and to a lesser degree, Canadians are worried about the high cost of fuel at the gas pumps due to carbon taxes, the soaring cost of food at the grocers, and the severe lack of housing due to mass immigration.More and more people in Canada, are lining up at food banks, and the PMO seems to be totally out of touch — ironically, much like Cuba, blaming everyone but themselves for the current problems.Could it happen here — are we headed for similar woes?There is a simple economic rule, and it goes for everyone: When people who don't know how to handle money are in charge, things are bound to get bungled up.Case in point, just this past week, Cuba's government and independent online news site El Toque exchanged blows after state-run media accused the website of manipulating the black market currency exchange rate to impoverish Cubans and stoke unrest, Reuters reported.The El Toque site (eltoque.com) has enraged the administration of Cuban President Miguel Diaz-Canel by publishing a rate in Cuban pesos for the greenback far higher than the two official levels set by his government, the report said.Cuba's state-run media this week ratcheted up its long-running criticism of El Toque, claiming the site's currency tracker — by far the most widely used on the island — amounts to "financial terrorism."El Toque defends its online exchange rate tracker, saying Cuba's allegations are "ridiculous and implausible," Reuters reported."The Communist Party has decided to convert our platform, El Toque, into a scapegoat to justify its failure," El Toque's Miami-based editor-in-chief, Jose Jasan Nieves, said in a message sent by email to readers.The official Cuban government response is in keeping with blaming everyone, including alleged corrupt officials, instead of themselves.Many Cubans feel it is not corrupt individuals, but a corrupt, dysfunctional system — one that they have lost faith in.The spat over the currency tracker comes as Cuba's peso currency has lost nearly half its value against the dollar in 2024 alone, according to El Toque, a devastating freefall that has slashed the buying power of Cubans already rattled by economic crisis, inflation and shortages, Reuters reported.The situation has now worsened, by a shortage of cash pesos — which Cubans, and Cuban business are hoarding, and not putting into banks.“There is money, yes, but not in the banks,” Omar Everleny Pérez, a Cuban economist and university professor, told Associated Press..Most of the cash is being held not by salaried workers, but by entrepreneurs and owners of small- and medium-size business who are more likely to collect cash from commercial transactions but are reluctant to return the money to the banks, said Perez.Rampant inflation is also pummelling the island nation.The monthly salary for Cuban state workers has ranged between 5,000 and 7,000 Cuban pesos (between $14 and $20 in the parallel market).As of yesterday, my Cuban sources in Miami told me that same Cuban monthly salary is now worth between US $4-$5, a massive tumble. Having to withdraw only a portion of it, will only bring more hardship.According to official figures, inflation stood at 77% in 2021, then dropped to 31% in 2023. But for the average Cuban, the official figures barely reflect the reality of their lives, since market inflation can reach up to three digits on the informal market, AP reported.Cuba, which imports around 70 percent of its food, has seen food prices soar. For example, a carton of eggs, which sold for 300 Cuban pesos in 2019, these days sells for about 3,100 pesos.Cuba's complex monetary system also includes a virtual currency, MLC, which was created in 2019, as it promoted a "cashless society," making credit cards mandatory to pay for some transactions, AP reported.This effort also fell flat, as many businesses simply refused to accept them. Cash or no sale.Worsening the situation, there are growing shortages. Even cigars, once representative of Cuba's national strength, were not available in some 5-star Havana hotels early this year.Hospitals have literally run out of oxygen and basic medicines. And people begging for change, once a rarity in Havana, is now commonplace.Cuban cab drivers are now demanding US$20 to drive a single mile, as fuel prices have jumped fivefold via a government price hike in March.Naturally, restaurant prices have also soared ... I would even say, quadrupled. All I can say is, bring US dollars.The Cuban advantage is no more, it doesn't exist. It is just as expensive, or even more expensive, than any other island resort nation..On my last visit in February, I was handing out new packages of Tylenol as tips instead of cash — they were treated as if they were gold.Visitors to Cuba should know that even the basic medicines are in short supply, and carrying some extra meds to give away, is permitted.Where did it all go wrong for Cuba?According to the Council on Foreign Relations, Cuba’s centrally planned economy has been mired by stagnation for decades. But over the past five years, the pillars propping up the island’s already feeble economy collapsed one by one, sending it into a tailspin.First, Venezuela’s socialist autocracy, which had lavished cheap oil on Cuba, saw oil output diminish under that regime’s mismanagement, thus cutting down on Cuba’s energy supply.Next, conservative and right-wing governments, such as those of Brazilian President Jair Bolsonaro and Colombian President Iván Duque, won office across Latin America and ended exploitative arrangements under which Cuba sent medics abroad and garnered most of their wages.And in the United States, President Donald Trump tightened sanctions in place for decades and cut off remittances to the island. Then came the COVID-19 pandemic, which was poorly handled by President Díaz-Canel, a lifelong Communisty Party insider who succeeded Raul Castro, brother of famed revolutionary Fidel Castro.Cuba’s 2020 border closure decimated tourism and contributed to the second-largest economic contraction in Latin America that year, after Venezuela’s, the Council on Foreign Relations reported.But Cuba, unlike its Caribbean neighbors, never saw tourism fully rebound.And although Cuba pivoted to allowing some forms of small private businesses in 2021, progress on additional market reforms has stalled.As a result, Cubans no longer have any faith in their politicians, and any sign of dissent is being quashed by the military — more beatings, more arrests, and more people being tossed into jail.With Cuba’s repressive, one-party system closing all routes to bottom-up change, Cubans are more likely to continue voting with their feet as they seek to escape economic chaos and repression. Hundreds of thousands of Cubans have left the island, including many of the younger generation, who see no future if they stay.A cab driver who took us to Hemingway's home outside Havana, admitted to me that he had a brother in Spain and another in the US.Why haven't you left, I asked.His parents have refused to leave, he said, and he is sticking by them — knowing full well, his life will probably never get any better.We had beers after, but the look on his face told me all I needed to know. Desperation is growing, and that can only lead to trouble.
