Informacion economica sobre Cuba

Cuba: $2.6 Billion in Remittances in 2012

June 11, 2013

Remittances have become the driving force of the Cuban economy.

Emilio Morales* (Café Fuerte)

HAVANA TIMES — According to an independent study, remittances sent to

Cuba from abroad continue to grow at an uncontainable pace and reached

the record figure of US $2.605 billion in cash during 2012.

In cash flow alone, this represents a 13.5 increase with respect to the

previous year's figures.

When the incomes represented by packages and luggage containing food,

medicine, electrical appliances and other materials sent to Cuba from

abroad (remittances in kind) are added to these figures, the total,

according to data processed by The Havana Consulting Group (THCG) is

estimated at US $5.105 billion.

The yearly study conducted by THCG is based on the analysis of Cuba's

hard-currency retail invoice database, the remittance amounts sent to

the island through official channels, an estimate of informal monetary

incomes and the expenses paid by visitors to Cuba.

It also relies on financial figures made available by Cuba's National

Statistics and Information Bureau (ONE). THCG, based in Miami,

complements this information with surveys conducted in both Miami and

Havana.

In the summer of 1993, Cuban President Fidel Castro allowed remittances

to enter the country, but only in spite of himself and begrudgingly, as

a means of securing hard currency and ensuring the financial survival of

the country.

Being forced to accept that Cuban émigrés were one of the most

significant forces keeping Cuba economically afloat during the "Special

Period" was a crushing ideological blow. US dollars flooded Cuba

overnight, arriving on the island to stay.

The dollar economy, 20 years later

The liberalization of the dollar, a measure taken nearly 20 years ago,

had a powerful impact on Cubans living on the island and abroad.

Nearly 70 percent of Cuba's mobile phone market, with over 1.6 million

cellular phones currently in service, is also financed by Cuban émigrés.

What Fidel Castro never imagined was that the liberalization forced by

circumstances upon the country would become the most efficient driving

force of the Cuban economy for the following two decades. No Cuban

economist, in fact, predicted such a scenario. Today, remittances reach

an estimated 62 percent of Cuban homes, sustain nearly 90 percent of the

country's retail market and favor the employment of tens of thousands of

people.

Revenues secured from remittances have risen well above those taken in

through the sugar industry – which entered its most disastrous phase in

1993 and has being going downhill ever since. The remittances report

greater volumes and efficiency than the tourism sector and represent

more money than exports of nickel and medications produced by Cuba's

biotechnology industry.

Below is a comparative list of the most important items of the Cuban

economy in 2012, as per their revenues in hard currency (US dollars).

Remittances in cash $2.60512 billion

Remittances in kind $2.5 billion

Total remittances $5.10512 billion

Tourism revenues $2.6133 billion

Nickel exports $1.413 billion

Medications $500.00 million

Sugar exports $391.30 million

The above list shows how the total revenues secured through remittances

sent to Cuba are above those of the Cuban economy's four main items as a

whole. In total, remittances account for US $5.10512 billion, while the

export of sugar, nickel and medications and the tourism sector together

bring in US $ 4.91760 billion, an estimate calculated without

subtracting the sums invested in each item, an operation that would

produce a notably greater difference.

That the entry of Barack Obama into office has directly led to an

increase in the sending of remittances to the island over the last four

years is beyond question. Over the period 2009-2012, this increase

reached a value of nearly US $ 1 billion.

An all-time record in remittances

The record figure of US $2.60512 billion in remittances taken in last

year is three times the total amount the government paid State employees

in salaries during this period. Currently, the average monthly salary

earned by a Cuban worker is 455 Cuban pesos (CUP), the equivalent of US

$18.95. Today, Cuba's work force is made up of 5.01 million employees,

4.08 million of which receive payment directly from State institutions.

The rest is employed by the private sector, made up of farmers, members

of cooperatives and freelancers.

The entry of Barack Obama into office has directly led to an increase in

the sending of remittances to the island over the last four years is

beyond question. Over the period 2009-2012, this increase reached a

value of nearly US $ 1 billion.

The total sum that the government paid these 4.08 million State

employees in wages is 928,586, 750.00 Convertible Cuban Pesos (CUC), a

figure calculated using the official exchange rate of 1 CUC for 24 CUP.

That is to say, the total amount paid by the State in wages is one third

the amount of money that Cuban émigrés send their relatives on the

island. If we add the amount sent in kind to this figure, then the rate

becomes 5.5 to 1.

The total amounts Cuba has received in remittances since 2000 are listed

below.

2000 – $986.96 million

2001 – $1.01087 billion

2002 – $1.07215 billion

2003 – $1.10046 billion

2004 – $1.03084 billion

2005 – $1.14412 billion

2006 – $1.25115 billion

2007 – $1.36271 billion

2008 – $1.44706 billion

2009 – $1.65315 billion

2010 – $1.92044 billion

2011 – $2.29454 billion

2012 – $2.60512 billion

The lifting of travel restrictions and those applied to the sending of

remittances and goods to Cuba from the United States are the measures

which have impelled this phenomenon most powerfully.

Last year, more than half a million Cubans living abroad travelled to

the island, a figure that makes Cuban émigrés the second most important

source of tourism in the country, below only Canada, with 1.1 million

visitors every year.

We must also bear in mind that, in the course of the last decade, the

migratory flow of Cubans leaving the island has remained at an average

of 47,000 émigrés a year.

In addition, the structural changes implemented by the Cuban government

over the last three years has stimulated the sending of remittances,

particularly in connection with the financing of new privately-run

restaurants, the rental or sale of real estate and the purchase of

automobiles.

What émigrés pay

Nearly 70 percent of Cuba's mobile phone market, with over 1.6 million

cellular phones currently in service, is also financed by Cuban émigrés.

So as to maintain the tradition of encouraging the sending of

remittances, the Cuban government has recently opened 118 cybercafés,

public Internet access points charging the extremely high rate of 4.50

CUC the hour of Internet use. It is clear that part of the money Cubans

use to access the Internet will also come from abroad.

Even with the investment restrictions it faces, the Cuban diaspora is

one of the most important driving forces of the country's economy. And

its significance could become greater if new liberalizations allowed it

to participate more directly in the country's economic reconstruction.

Remittances are an indicator of the transformative role Cubans are going

to play in Cuba's future, no matter how irritating this may prove for

people on both shores.

—–

(*) Cuban economist. Former chief of marketing strategies for Cuba's

CIMEX corporation and author of the books "Cuba: A Silent Transition

Towards Capitalism?" and "Marketing without Advertising, Brand

Preference and Consumer Choice in Cuba". He is the current president of

The Havana Consulting Group (THCG), based in Miami. The statistical

tables used in this article were prepared by THCG.

http://www.havanatimes.org/?p=94444


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