By Francisco Acevedo
HAVANA TIMES – Cuba is moving towards a digital payment system it was announced last week, and it has been the talk of the town ever since, because it has encountered stumbling blocks and triggered a retreat after barely starting.
According to government officials who appeared on the nightly TV show Mesa Redonda, they can’t continue to spend foreign currency making paper currency. But behind the scenes, there is greater control of your money because they can know exactly where you spend every cent, what you paid for, what you earned, etc., by following your transactions.
By going through earnings and payments, and even criminalizing financial activity, because the Law includes a clause that stipulates that your deposits can be seized if you don’t comply with the Law, without the need for a trial or any similar procedure. This resolution violates the Cuban Constitution, where the circumstances that can lead to an expropriation are clearly stipulated.
The measure was supposed to be gradually implemented in theory, over a period of six months, but it has sparked distrust ever since it was launched, and people are beginning to think a thousand times before depositing their money in a bank. This is because you have to work magic to be able to withdraw it again, with kilometer-long lines at ATMs and a maximum limit of only 5,000 pesos (a little over US $25) which you easily spend in a trip to the agro-market.
Think tanks are forgetting that if you go to a Banco Popular de Ahorro and you have a card for a Banco Metropolitano account where you receive your wages, then you are charged 15% commission for the withdrawal because they are different bank institutions.
The measure came drastically into force and the country still doesn’t have the infrastructure it needs to be able to access services or resources, because most private sellers don’t accept bank transfers, even when they have a retail space within a state-led institution, like the Cuatro Caminos market.
When this facility was reopened to the public back in 2019, you could pay with Transfermovil at every cash register, but the machines used for these operations began to disappear months later, and they don’t have any at the moment. The sum might not be so big when you try to buy root vegetables and other vegetables, but if you’re trying to bring a leg of ham back home, for example, you’ll have to go out with more than the 5000 pesos you’re allowed to withdraw, because sellers are only accepting cash.
Business owners in Cuba began to complain on social media, because even though there is still time for the measure to be implemented, they are already having to deal with the 5,000 peso maximum withdrawal. Bank branches are asking for an application letter in which you have to explain what you’ll use the money for. Isn’t this more control? But you aren’t given the cash on the spot, a meeting of the bank’s board is needed to determine whether the withdrawal is approved or not, a formality that can take up to 10 days. Then, it also depends on whether cash is available when you actually go to pick it up.
The result? Projects and investments on hold that are being hampered by credit (and the consequent payment plan), and their objective is exactly to replace imports and to save the State foreign currency.
The self-employed that sell iron-fittings to micro, small and medium-sized enterprises (MSMEs), for example, aren’t accepting banks transfers because when they have to go to the bank to pick it up, they have to face the same problems and so they prefer cash.
Businesses selling cash have also appeared on Facebook, half in jest and half-seriously, because there is always someone who wants to make a profit.
All of this is happening in Havana, and it’s best I don’t go into people living in rural areas, who only use their smartphones (if they have one because they are doing well) to make calls and have no idea how to transfer money, or the elderly who aren’t used to using tech. We also can’t forget that Internet services in Cuba aren’t stable, and a blackout can come at any inopportune moment.
In other words, it’s the old story of the dog biting its tail, because one of the banks’ main missions is to promote transfers and deposits, not limit them; it’s economic irrationality at its best.
The chaos unleashed has been so great (even with the risk of a social uprising) that the Government had to take a step back and even began to improvise cash withdrawal points at places that distribute liquefied gas. Can it get any more absurd? We’re on our way to having the hardship we have with foreign currency, which any citizen can in theory buy at the State’s exchange rate (120 CUP : 1 dollar) at the bank, but it’s never available, and when it is, employees buy them all up (they are worth over 200 on the street), in this case at the Gas station, which by the way, has a super long line because people are going for another reason.
We never get tired of hustling, but we’re not improving, things are just getting harder. The thing is, the digital payment system isn’t a bad idea, it’s an alternative to using cash; in fact, it was further developed with the COVID-19 pandemic, but it needs a tech structure that it doesn’t have, and it can’t restrict the circulation of cash. It has been a natural process in every country, and doesn’t discriminate against what existed beforehand, because 80% of large and small business exchanges are made in cash in this country, according to official statistics. So, how can they eliminate this all of a sudden?
There are so many pesos in circulation in Cuba, due in part to the joke that was the Economic Reforms process, and this has made the Government panic and led them to come up with this madness.
It’s been months now that if you go to the bank to cash a check or pension payment, they give you the smallest bills they can, because the others (limited) are only for ATMs. You have to go with a backpack to pick cash up, because there are hundreds of bills, even though they aren’t worth much.
Our President Miguel Diaz-Canel and Vice-President Manuel Marrero haven’t spoken publicly on the issue, but if they did, it would be to pour water on the fire and say that now isn’t the time, but that they will do it gradually in the future.
In short, another stab in the dark.