Return of remittances to Cuba declares US, “happy” regime

Georgina, a 30-year-old Cuban living in the United States, hopes she can soon stop improvising every time she wants to send money to her grandmother in Cuba after two difficult years.

The announcement by the US government that it will eliminate the limit of $ 1,000 per person and a quarter of remittances will facilitate the economic assistance that he sends monthly to his 74-year-old maternal grandmother in Cienfuegos (Central Cuba).

Until 2020, she and her family used the most common system for sending money that they were able to raise together: the offices of Western Union, an American company dedicated to sending foreign currency.

But that ended in November 2020. On that date, then-US President Donald Trump banned any transactions between the US and Fincimex, the financial arm of the Cuban state-owned Cimex Group that had worked with Western Union.

The announcement caused the immediate closure of more than 400 offices of the American company on the island. And start a lot of headaches for most of the more than 2 million Cuban Americans estimated to live in the United States.

Initially, Georgina, like many Cubans living in the United States, began sending dollars through a mule (someone who carried the money by plane and actually delivered it upon arrival in Cuba).

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Cuba currently allows foreign currency up to $5,000 to enter the country without having to declare it.

“We’re looking for people on Facebook who are going there, and there are those who are advertising,” he told Efe in a phone call.

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On social networks, it was relatively easy to find people who offered to transfer money to the island, although the commission could exceed 30% of the amount sent (the fee at Western Union was 5%).

On many other occasions, his family had to look for people to stop in third countries – such as Mexico – to carry dollars.

But the pandemic has ended international flights and made that option nearly impossible. “This is life, the simplest things become impossible,” he complains.

Six percent of GDP

Remittances make up a large part of the income of thousands of families in Cuba. Between 2005 and 2020, they represented 6% of the island’s gross domestic product, according to estimates by independent experts.

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In 2019 alone, the money received – 90% from the US – was the island’s second source of foreign currency, after only exporting medical services and above tourism.

Trump’s decisions changed this direction. According to data from Miami-based consulting firm Havana Consulting, remittances in 2021 fell by 70% compared to 2019, after barely exceeding $1,000 million.

Emilio Morales, chief executive of the Havana Consulting Group, doubts that the measure announced by Biden will end the problems involved in sending remittances and resorting to mules.

On one side is Fincimex. On the other hand, the gap between the official exchange rate (24 kopecks to the dollar) and the street rate (currently about 115 kopecks) has widened.

Cuba legalizes bitcoin and cryptocurrency for service payments. Image: the Internet

You have to remember that half of the transfers come via mules. Nobody in their right mind would want to do this legally. The official exchange rate is 25 while on the street it is over 100. Who would legally send dollars?

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Return of remittances, but without the knowledge of the administrative company

In addition, Morales insists that the ball is in the court of the Cuban government and points out that it is Havana that should separate the armed forces from the administration of receiving foreign exchange through Fincimex.

It is unclear which company will manage the dollar within the country. What analysts are clear about, despite Washington’s announcement, is that the responsible entity should have nothing to do with the military.

In this regard, last February the country’s central bank approved a license for a company called Orbit SA to manage remittances, something that was reported suspiciously by independent media.

It is a company about which there is no official information other than the fact that it was founded in February 2020 in Havana, but it is not known who runs it.

Aileen Morales

"Beer nerd. Food fanatic. Alcohol scholar. Tv practitioner. Writer. Troublemaker. Falls down a lot."

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