Informacion economica sobre Cuba

Posted on Wednesday, 06.12.13

Remittances from Cubans abroad drive the island’s economy
By Juan Carlos Chavez

Cash remittances to Cuba in 2012 surpassed all revenue coming from the
main components of the Cuban economy while becoming the largest element
of support to the retail market, according to a study by a Miami-based
analysis group.

The study, titled “Remittances to Cuba: the Most Powerful Engine of the
Cuban Economy,” was done by The Havana Consulting Group. It concludes
that in 2012, remittances reached $2.605 billion. The number represents
an increase of more than 13 percent compared to the previous year of
nearly $2.3 billion.

“Today remittances to the island reach 62 percent of Cuban homes,
support close to 90 percent of the retail market and allow employment of
tens of thousands of people,” the study says.

The remarkable upward trend has also been a common denominator in goods
(electrical appliances, clothes and consumer items, among others) that
Cubans abroad ship to relatives or friends in Cuba. This category
amounted to $2.5 billion in 2012, according to the study. Both
categories (money and goods) together surpassed $5.105 billion.

“The remittances have left behind the powerful sugar industry ($391
million) — which by 1993 had entered its biggest crisis and it is still
in decline — they surpass tourism ($2.613 billion) in volume and
performance, provide more revenue than nickel exports ($1.413 billion)
and the pharmaceuticals produced by the Cuban biotechnological industry
($500 million),” the study says. “And this without subtracting costs in
each category, which would make the difference significantly larger.”

The injection of remittances has been a powerful pillar for the
country’s economy, which has been practically stagnant and with high
levels of unemployment. But it’s role has now been strengthened because
of the deteriorating economy, according to experts familiar with the issue.

In October 2010, the Cuban crisis forced Raúl Castro’s government to
launch market reforms and other emergency initiatives. The reforms,
which a large part of the opposition calls “insufficient” and
“cosmetic,” include a larger participation of foreign investment,
self-employment and services in dozens of labor categories.

The study emphasized that the Obama administration’s policies
contributed to the increase of remittances. During his first term, Obama
lifted most of the restrictions of travel and remittances while easing
up religious, cultural and educational exchanges.

“Without any doubts, the arrival of President Barack Obama at the White
House has directly influenced the increment of remittances in the last
four years, an increment that has almost reached $1 billion in such a
short time,” says The Havana Consulting Group’s study.

The study highlights that cash remittances in 2012 surpassed, at a ratio
of 3 to 1, the salaries the government pays to the approximately 4
million workers who work for the public sector. Officially, the average
salary in Cuba is 455 pesos a month, equivalent to $19.

“If to this value we add remittances arriving in the form of goods, the
ratio would then be 5.5 to 1, a monumental difference,” the study says.

Another point that has favored the increase of remittances is closely
linked to the migration flow of Cubans abroad, the study adds. The flow
has been kept at 47,000 people annually, almost a half-million in the
last decade.

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