Cuba Is Freezing the Bank Accounts of All Foreign Companies

There is growing suspicion that the Cuban regime has appropriated these funds to pay for its imports.

By 14ymedio / EFE

HAVANA TIMES – The Cuban regime is communicating to foreign companies that they will not be able to extract or transfer abroad the currencies they currently have deposited in Cuban banks. This was confirmed to EFE by “multiple business and diplomatic sources.”

Foreign companies are also being offered the possibility of opening a new type of bank account, called “real,” which must be fed with “foreign currency.” These may be used for foreign transfers and cash withdrawals.

However, some foreign companies indicated to EFE that there are also problems in these “real” accounts with extracting currency in cash and repatriating money.

In an article published this Thursday, EFE news agency says that the measure implies a recognition of the tacit freeze that the country has been suffering for months, and generalizes the model that the Cuban authorities tested in the first half of this year with a handful of foreign companies, information also reported by the Spanish agency last April.

In fact, this newspaper had access last July to a letter from Agri VMA, a Vietnamese company with facilities in the Mariel Free Trade Zone. The regime officially restricted this kind of operation in early 2025, but in practice it had already been controlling its partners’ finances for a long time, allowing them to make transfers only under express authorization.

In a desperate request for authorization, dated May 28, 2024, Agri VMA addressed three Cuban ministers to explain the imperative need to access their frozen funds in an account of the International Financial Bank — owned by the Cuban state — to send $300,000 to their headquarters in Vietnam. The company claimed to need these funds to “buy raw materials and ensure a perfect continuation of our services.”

It was not possible to know whether the transfer was finally authorized, but last year Havana became much more careful with its Asian ally, its second trading partner on that continent after China and its first in investment on the island. Agri VMA itself has not stopped appearing in the headlines for its “successful” rice project and last January became the first foreign company to which the Cuban state ceded land to exploit.

What is most suspect is whether the regime has been using these currencies to pay for its imports, in a context of absolute illiquidity in the banking system. Cuba has 334 businesses with foreign direct investment, of which 56 have 100% foreign capital, according to data from the Ministry of Foreign Trade.

According to what EFE published today, the plan is part of the mechanism for management, control and allocation of foreign exchange provided by the Government Program to Correct Distortions and Revive the Economy, the recently published plan of anti-crisis measures, which does not contain details.

According to the same EFE sources, the Cuban Foreign Ministry met this Wednesday with the diplomatic corps to communicate “a similar mechanism to alleviate the financial difficulties suffered by the representations of other nations,” although without having to open a “real” account. Thus, it was explained to them that a cut-off date for their accounts would be announced shortly. Foreign currency received from then on could theoretically be withdrawn and transferred abroad. The availability of previous funds is not guaranteed, they added.

These announcements, which highlight the banking, economic and financial crisis that Cuba is suffering, take place at a time when many foreign companies are experiencing serious difficulties. These are aggravated by the distortions in the exchange rate, since legal entities must operate at 24 pesos per dollar when the street exchange of the greenback is around 450.

The measure is also taking place months after all foreign entities were unexpectedly told that they must start paying rent in dollars for the buildings they rent from Cuban real estate companies and for the salaries of their employees (which are paid through a Cuban agency that collects a commission).

Neither the Cuban government nor the Central Bank of Cuba, which is organically dependent on the executive, has publicly reported on these measures or explained the reasons. Experts and observers believe that the authorities have resorted previously to using the currencies in these accounts to be able to make payments abroad.

Also, several years ago, the debts of the Cuban State to more than 250 Spanish companies raised the sector’s complaints and forced the government of Pedro Sanchez to intervene. In a visit to Havana on the occasion of the opening of the Tourism Fair, dedicated in 2018 to Spain, the then Minister for Industry, Trade and Tourism, Reyes Maroto, asked the regime for a payment plan for its debt with Spanish entrepreneurs, as well as a reduction of bureaucratic obstacles so that they could do business on the Island.

In return, he offered Spain’s support for investment in Cuba, such as support lines of credit for the internationalization of MSMEs* and, especially, an equivalent fund created with the $400 million debt that Spain forgave in 2015.

*Translator’s note: Literally, “Micro, Small, Medium Enterprises.” The expectation is that they are privately managed, but in Cuba this may include owners/managers who are connected to the government.

——

Translated by Regina Anavy for Translating Cuba

Read more from Cuba here on Havana Times.