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Military and family remittances, a well-kept secret

The military controls the largest amounts of money coming into Cuba in the form of remittances.

La Habana

On July 8, the then Minister of Economy and Planning Marino Murillo Jorge reported in the National Assembly of the People's Power on the state of the Cuban economy during the first half of the year, when growth in the Gross Domestic Product (GDP) came in at a paltry 1%, half of the Government's projection. 

Murillo put this down to the fact that since December of last year there had been financial constraints born of falling export revenues and limitations on fuel supplies. But his protracted speech contained no references to the funds generated by the exports of specialized services, mainly rendered by doctors and paramedics, in Venezuela, Brazil and Ecuador, nor was there any talk of the 3.6 million tourists who visited Cuba in 2015; or the family remittances coming in, mainly from the US.

The grave financial situation that the Government says the Cuban economy is facing clashes with the information provided by The Havana Consulting Group (THCG) last June, when it indicated that remittances to Cuba had hit a record high of 3.35 billion dollars in 2015.

THGC President Emilio Morales said that from 2008 to 2015 remittances grew by over 1.90 billion, with an annual average of 238.3 million dollars, which he called an "unprecedented" development.

THCG attributed the increased flow of money into Cuba to increasing emigration, the lifting of restrictions on the remittances sent to Cuba, travel by Cuban Americans to the Island, and the opening up of the sector of the private and cooperative non-agricultural economy.

The military and remittances

Western Union has offices in many of Cuba's retails stores in the 15 provinces and the special municipality of the Isla de la Juventud, which are administrated by the Grupo Administración Empresarial S.A. (GAESA) of the Revolutionary Armed Forces (FAR). Thus, the military controls the largest amounts of money coming into Cuba in the form of remittances.

FINCIMEX, the financial institution of the CIMEX Corporation, managed by GAESA, issues magnetic cards to Cuban users for free, like Caribbean Transfers, Ocean Card, Trascard and American International Service, S.A. The holders of these cards, after signing the contract, can receive money from Europe, the United States, Angola and other parts of the world, and draw cash from banks and ATMs throughout Cuba.  

In addition, the Postal Service has established offices in Cuba's major cities, dedicated to the collection of money sent mainly from Europe. Many people turn to this service, which actively competes with Western Union.

With the exception of mulas (who smuggle money into the country without declaring it, to deliver it to recipients for the payment of a fee) the Cuban government has control over most of the money sent home by Cubans abroad to their relatives in Cuba.

But the Government never discloses information on these remittances, or the revenues generated by Cuban Americans' trips to the island, even though that money is registered in the books.  

The report "Tourism, Arrivals of International Visitors, January to December, 2015, January 2016 Edition," published by the National Bureau of Statistics and Information (ONEI), in the section "Arrivals by International Visitors, by Country, from January to December," in the "Other" section, refers to Cuban Americans and Americans who visited the island: 943,157 visitors, who mostly stayed at hotels and private guesthouses renting out rooms. Both the Ministry of Tourism and the National Tax Administration Office (ONAT) closely tracked spending by these people during their stays in Cuba.

With regards to the figure of 3.35 billion dollars that flowed into Cuba in 2015 in the form of remittances, THCG does not identify the sources that provided this information, which makes its credibility suspect.

Who does know the exact amount is the Cuban Government, but it keeps it under wraps, as part of its policy of not considering those revenues part of the GDP.  

What is certain is that the total remittances sent to Cuba in 2015 surpassed the figures from the export of nickel, sugar and tobacco, whose prices are way down on the international market, as well as gross revenues from tourism, at 2.8 billion, and the sale of medication.

More than 60% of the Cuban population receives remittances sent by relatives living abroad, mainly in the US. Due to the ripple effect that these remittances have, the rest of the population, through multiple economic transactions, takes advantage of them.  

But who really rakes it in, benefitting from the dollars gushing into Cuba, are the Government's over 2,000 retail stores (TRDs) established throughout the country, which have a monopoly on sales in dollars. Cubans are forced to spend a good portion of the dollars they receive on food, toiletries and household appliances at the TRDs, which last year posted turnover of 5 billion dollars.

Remittances have also been crucial to the creation, growth and expansion of microcompanies and SMBs. Last year 510,558 Cubans, in accordance with Resolution 42 of the Ministry of Labor and Social Security (MLSS), engaged in authorized private economic activities.

In Havana alone, 2,000 licensed homeowners rent out 4,700 rooms to tourists, and there are 400 small private restaurants, many of which have signed contracts with travel agencies for the sending of packages by tourists to their establishments.  But the Cuban State still does not recognize these small entrepreneurs as legal persons and, therefore, does not have exact figures on the impact of remittances on the flourishing of these SMBs (Small and Medium-sized Businesses), such that what is said about them is purely speculative.

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