Cuban Government Restricts Foreign Companies' Access to Funds, Offers Alternative Solution

The Cuban government has informed several foreign companies that they will be unable to repatriate the funds in their bank accounts on the island. These accounts hold amounts that, in some cases, reach several million dollars, as reported by EFE news agency on Thursday. This decision has caused significant discontent among the affected businesses, some of which have voiced their grievances to their respective governments, according to unnamed business and diplomatic sources cited by the agency.

One businessman reported that his account was "frozen" and that the funds could only be used for domestic operations. "We are completely against this. It's not the Cuban government's money; it's the companies' money," he told EFE.

Introduction of New Foreign Currency Accounts

As a workaround, the authorities are proposing to the affected companies—through individual meetings—the creation of a new type of foreign currency bank account within Cuba. This initiative, still in its pilot stage and highly limited, would theoretically allow businesses to operate without restrictions, as the transactions in these accounts would be backed by monetary reserves. However, these new accounts only accept new capital, meaning funds from existing accounts cannot be transferred; only external transfers are permitted.

Some foreign enterprises, particularly those involved in attracting investment to Cuba, have already begun opening and using these accounts. Companies associated with GAESA—a business conglomerate of the Revolutionary Armed Forces controlling vital sectors like tourism, telecommunications, retail, banking, real estate, and fuel stations—are reportedly operating under this model.

Mixed Reactions from Foreign Companies

Among the foreign companies impacted, some view this measure as a difficult yet inevitable step. They argue that currency access restrictions have been in place for years and hope the new accounts will enable them to conduct international operations or repatriate profits. However, many business owners remain skeptical, recalling past experiences with mechanisms like the now-defunct Convertible Peso (CUC) or the Freely Convertible Currency (MLC). Their concerns focus on whether the current conditions of these accounts will persist long-term, especially given Cuba's ongoing crisis.

Severe Liquidity Challenges

The theoretical advantage of these new accounts is their supposed immunity to the severe liquidity issues plaguing Cuba's entirely state-run banking system since 1959. The system is currently in a critical state, with multiple parallel exchange rates, decapitalization, and liquidity shortages in both Cuban pesos—rationed since August—and foreign currencies, with discretionary restrictions in place.

These problems occur amid a deep economic crisis that has gripped the island for over five years, driven by the pandemic and, more significantly, by the implementation of flawed economic and monetary policies. Since 2024, access to foreign currencies has been heavily restricted. The financially strained state has been utilizing bank system funds to procure essential goods abroad. Cuba holds a monopoly on foreign trade, importing about 80% of the country's consumed products, prioritizing food and fuel due to the collapse of domestic production.

In this context, the government has recently promoted simultaneous processes of banking (aimed at reducing cash circulation) and dollarization (of administrative procedures and state services) to capture more foreign currency and meet international payment obligations. As of the close of this report, the Cuban government has not commented on EFE's revelation, nor has there been additional information regarding the withholding of foreign companies' funds on the island.