Sending of remittances to Cuba registers new record in 2016

The sending of cash remittances to Cuba from the United States last year reached an estimate of 3.444 billion dollars, approximately 2.7 percent more than in 2015, which supposes a new record, according to a report by the Miami-based The Havana Consulting Group (THCG).

The increase in remittances was mainly due to the increase in Cuban migration to the United States, the major part through “informal routes” that allowed 50,082 Cubans to reach U.S. territory in 2016, a year in which 80,082 Cubans left the island, THCG highlighted in a report EFE had access to.

HIKE IN ARRIVAL OF CUBANS TO THE UNITED STATES

Arrival of Cubans to the United States per year

60 thousand

Source: Pew Research Center

Thus, the sending of remittances to the island went from some 2.290 billion dollars in 2011 to 3.354 billion in 2015 and 3.444 billion dollars in 2016, according to THCG estimates.

In the article drawn up for the THCG Business Report for Emilio Morales, president and general manager of the aforementioned firm, a second factor with a great influence in the increase of remittances stands out: the increase of flights to Cuba from U.S. soil, especially starting in the second half of 2016.

There was a significant increase in the number of passengers in that period, a great deal of which was due to the reduction in the price for airline tickets, with a decrease of more than 50 percent compared to the charter flights, which cost 450 dollars.

This factor led to a significant increase in trips to the island by Cuban Americans, specified THCG, a magazine that helps to understand the Cuba market and its consumers.

A considerable increase in the number of Cubans who traveled to the United States was also registered, many of which made several annual trips to this destination, with a stay lasting from two to three months.

Furthermore, THCG studies revealed that 30,000 Cubans with Spanish nationality traveled to the United States a couple of times a year, many of which went to work in the agricultural sector, factories and even in the care of patients.

It is estimated, the report adds, that between 20,000 and 40,000 Cubans traveled several times a year thanks to the visa they were granted valid for five years.

The article concludes warning that, despite the record in the sending of remittances to Cuba in 2016, “the growth rate reached that year is the lowest in the last eight years,” which warns of a “possible slowdown in the growth of remittances to the island.”

A possible slowdown in the sending of remittances that, despite the record sending in 2016, could be affected by the annulment of the “dry foot / wet foot” policy and that would drastically reduce the migration flow of Cubans to the United States.

The decrease in the granting of tourist visas to Cubans could also have an influence in this slowdown.

In this context, THCG highlighted the fact that the principal U.S. remittances companies are exploring their incursion in the Cuban market, which could mark the start of the end of the hegemony of Western Union (a leader in global payment services) for almost 20 years.

The finance business could be the door for the Cuban and U.S. banking institutions to start establishing direct relations without third parties, since the United States is the principal market for the sending of remittances to Cuba, with 90 percent of the currency transferences made.

The political changes announced by Donald Trump last June will not change the authorizations for the sending of remittances to Cuba, according to the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury. In addition, it includes an exception that will allow for transactions related to the sending, processing and reception of authorized remittances if otherwise they were restricted by the new measures on transactions with certain identified Cuban military, intelligence and security services. As a result, the ability to send or receive authorized remittances will not be limited.

However, changes will be introduced in the definition of prohibited members of the Cuban government that can exclude certain persons from receiving remittances from the United States.

EFE / OnCuba

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