Cuba Eases Into Free-Market Reforms as Cash Shortages Grip the Island

Long before sunrise, Víctor Rodríguez, a 72-year-old retiree, was already in line at a Havana bank several kilometres from his home. Arriving at 7:30 am, he hoped to finish before the midday heat — and before the branch ran out of bills, lost power or saw its internet connection drop. Dozens of others, many of them elderly, had made the same calculation, queuing for the maximum daily withdrawal of 20,000 pesos, worth roughly $28 at the black-market rate.

Such scenes have become routine across Cuba, where chronic shortages of food, fuel and medicine are now compounded by a scarcity of cash itself. Prices have surged, the economy is increasingly dollarised and dependent on imports, and the peso hit a record 700 to the dollar on Wednesday — a roughly tenfold loss of value since 2021.

The government, communist since the 1959 revolution, has responded with a series of free-market reforms. Last week it released new 10,000- and 20,000-peso notes, which officials say should improve cash supply. It also authorised the country's first private currency-exchange house, an unprecedented step in a nation where the central bank has long set the exchange rate. According to the central bank, legal private exchange houses will help inform the official rate, make the process more transparent and curb speculation.

President Miguel Díaz-Canel has insisted Cuba is not abandoning socialism, describing the measures as a response to the punishing effects of US sanctions, which he says have escalated under President Donald Trump.

For many Cubans, however, the benefits still look remote. "If you eat, you can't buy clothes. If you buy clothes, you can't go out; if you go out, you can't eat," said Yuset Rodríguez, 42, of Havana, summing up the daily trade-offs facing families.

Consumer prices rose more than 25% between January and August this year compared with the same period a year earlier, according to the statistics agency ONEI. Many economists argue real inflation is far higher, since the official index excludes the thriving informal market — a gap made wider by fuel costs that soared after a US move in January to cut off oil imports. Pump prices have since settled, but at $2 to $3 per litre they remain nearly double the global average of $1.57 for high-octane fuel.

Many residents say prices, rather than empty shelves, are now their biggest burden. Midiala Hon Mesa, 56, shopping in Havana late last week, said farm markets remain well stocked but prices can leap from one day to the next while wages stay flat. "There is food in Cuba. The problem is that prices have skyrocketed and the economy is in the gutter," she said.