Military and family remittances, a well-kept secret

Military and family remittances, a well-kept secret
OSMAR LAFFITA ROJAS | La Habana | 28 de Julio de 2016 - 21:21 CEST.

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.

Source: Military and family remittances, a well-kept secret | Diario de
Cuba - http://www.diariodecuba.com/cuba/1469733700_24208.html