Remittances to Cuba: With 28 Cents

Fernando Ravsberg

HAVANA TIMES, Nov. 18  — Responding to one of my posts, some readers said that some Cubans living in Cuba spend their vacations in five-star hotels in the cays, paying for their expenses with money sent to them from émigré relatives in Miami.

I found the comment very original, and it also gave me the idea of dealing with the issue of family remittances by trying to discern their true social impact and economic repercussion in Cuba, going beyond any politically motivated myth.

When I raised this possibility with researchers at Havana’s Center for the Study of the Cuban Economy, everyone smiled.  “It’s difficult to find a Cuban who sends more than $100 USD a month, and I assure you that those who receive it can’t pay for their vacations with that,” they told me.

I verified with friends and neighbors that this was true, but it still remained for me to discover the total amount of remittances received.  That task is not easy because almost half of this money arrives hidden in the pockets of “mules” who travel to Cuba.

In any case, there are serious approximations, such as those of Manuel Orozco, a specialist in remittances with Inter-American Dialogue, a think tank headquartered in Washington D.C.  He calculates the annual value of Cuban remittances as being between $830 million and $985 million USD.

This figure concurs with the International Fund for Agricultural Development of the United Nations and with the Multilateral Investment Fund of the Inter-American Development Bank.  Both estimate the amount of remittances to be $983 million USD.

Math was never my strong suite, so allow me to round the figure up to $1 billion to facilitate my accounting.  Supposing that 80 percent of Cubans receives remittances, this would then result in each of them getting around $0.28 USD a day.

I can assure you that the life in Cuba is not so cheap as to permit someone to eat, dress and pay their electric bill, etc. on a quarter a day.  Nonetheless, there are optimists who suppose that the money is for vacationing in five-star hotels!

There are those who assure that the quantities sent are well above those received by people in other countries of the region, with this demonstrating the success of the Cuban community that emigrated.  However, I have the impression that the Cuban émigrés are much more detached.

Let’s again compare Cuba to El Salvador, a country with half the number of residents.  In January 2010 alone, $236 million USD was received in that small Central American nation, which means that annually this community sends their families almost three times more than Cubans do.

In the poorest homes in Cuba, remittances can end up doubling the family income.  However, this proportion is not produced because of the large amounts that are sent, but because of the low wages the government pays to its employees.

In some families this aid is the key to making it to the end of the month, and family members would go hungry if this were not sent.  In other cases it means that this indispensable extra money allows people to buy a TV or a washing machine, or to repair the house or throw their daughter’s “sweet 15” birthday party.

But there are also those who don’t need remittances, those who pay their own way, including on vacations.  Reading my post from last year titled “Pobrecitos los cubanos” (Poor Little Cubans), can help one understand who these national tourists are and where their money comes from.

It’s only when those 28 cents filter into the hands of the government that they turn into $1 billion USD, cash that winds up in the nation’s coffers thanks to a 240 percent tax placed on all products sold in hard currency.

Putting this into context is to say that remittances represent a revenue stream similar in magnitude to that of tourism.  However, the million Cuban emigrants barely send a fourth of what is obtained abroad from the labor of 50,000 Cuban aid workers.

During the economic crisis of the 1990s, the transfer of remittances into the country was a matter of life or death for the government and also for the population.  Today its importance has decreased, but it continues to be a significant source of hard currency for the economy.

Trying to drown Cuba, US political leaders and exile groups tried to put limits on remittances, but it was a futile struggle.  Even an anti-Castro radical like the late Celia Cruz sent money to the island all her life, as his sister admitted to me.

But not even the amounts that the singer sent were enough to pay for five star hotels.  So those who send remittances can sleep soundly, no one in Cuba is blowing the money that required so much sacrifice for them to earn.