How much do they add, where do they come from and what is the importance of remittances for the Cuban economy

(CNN Spanish) – After a series of historical protests about the economic situation and the shortage in Cuba, which took place last week in different cities of the country, the president of the United States, Joe Biden, ordered this Monday to examine his government’s policy on remittances sent from his country to the island, in an attempt to alleviate the situation.

Biden had said last week that under the current circumstances, remittances – money transfers from abroad to his Cuban relatives on the island – would end up in the hands of the Cuban government. Since the end of 2020, official remittances have been blocked by US sanctions.

The White House has long been under pressure to relax the tough anti-Cuba policy implemented by former President Donald Trump, who enacted some of the toughest economic measures against the island in decades, reinstated travel restrictions and, before leaving office. , named Cuba as a state sponsor of terrorism.

The president of Cuba, Miguel Díaz-Canel, has blamed these measures and in general the US embargo for the recent protests against the economic situation. In statements on Cuban television, Díaz-Canel said that it was explained to the population that they were going to “enter a difficult period, of difficulties and economic deficiencies” since 2019 when the “restrictive measures” and one “began to be applied. sanctions policy “in the Trump administration.

Under the Obama administration, in which Biden served as vice president, there had been a thaw in relations, with the reopening of embassies and the relaxation of some current restrictions, and many expected the same from the current government, especially with regard to the remittances.

The weight of remittances

But, specifically, how much do these remittances amount to, what countries do they come from and how important are they for the Cuban economy?

According to estimates of Inter-American Dialogue, a Washington-based international affairs think tank, which were sent to CNN en Español by analyst Manuel Orozco, Cuba received in 2019 remittances worth more than US $ 2,055 million, which constitutes 2% of GDP of Cuba, according to official data.

The National Statistics Office of Cuba does not publish reports on formal and informal remittances in the country.

Of a total of almost 4 million households in Cuba, 1,042,451 received remittances in the period (approximately 26%), at an average of US $ 2,210 per household, according to the Inter-American Dialogue.

The United States is the main source of these remittances, concentrating just over US $ 1,721 million, or 83.72% of the total. It is followed by Spain, where remittances are originated for a value of US $ 178.2 million (8.67%), while remittances for a value of US $ 156.4 million (7.61%) arrive from the rest of the world.

The report also indicates that of the total of 1,654,684 Cubans (according to 2019 estimates) living in the United States, 65% of adults send remittances to relatives in Cuba, according to the Inter-American Dialogue.

Informal shipments

The analyst Manuel Orozco, a member of the Inter-American Dialogue, reminded Café CNN this Wednesday that more than 60% of remittances sent to Cuba occur informally, through what are known on the island as “mules” or “travelers.” , and they do not contribute money to the government.

“There are around 800,000 remittance transactions monthly, of which about 300,000 officially occur, through media such as Western Union or MoneyGram, among others,” he said. “The government is left, through these transactions, with about US $ 2 for each one, that is, they may be making a maximum of US $ 1 million per month.”

Official remittance transfers are also controlled by Fincimex, a financial company belonging to the State of Cuba, emphasizes Orozco. Sanctioned in 2020 by the United States, it is for this reason that remittances have been affected by recent Washington policy.

In this regard, the analyst recalls that Fincimex is a “financial authority that executes and controls all payments for international financial transfers, and that includes operations carried out by the Cuban army, the police, and other state entities.”

The impact of the pandemic

According to data from the Economic Commission for Latin America and the Caribbean (Cepal), Cuba’s economy would have contracted by 8.5% in 2020 due to restrictions and the fall in economic activity as a result of the covid-19 pandemic.

Omar Everleny Pérez Villanueva, doctor in Economic Sciences and tenured professor at the University of Havana, highlighted to CNN Radio Argentina especially the blow to tourism.

“One of the key variables was the development of international tourism and suddenly that disappeared. In 2020 we received only 6% of the tourists that were received previously. For this year, much less are expected. The sources have been cut, ”he said.

In addition to the sanctions on Fincimex, the travel restrictions have hit especially hard the sending of remittances, by preventing the movement of money through “mules” or “travelers.”

Orozco told CNN that the drop in remittances in 2020 is estimated at 16%, although it could be more due to the closure of airports and borders and their impact on the movement of people.