2024-03-01 19:45:00
It is an emergency remedy for a beleaguered economy. In Cuba, the 11 million inhabitants of the Caribbean island will experience a spectacular increase at the pumps at gas stations this Friday, March 1st. After being postponed, the decision to drastically reduce fuel subsidies will apply, leading to increases of more than 400% for citizens. The finances of the state led by a communist regime are in fact on the brink of collapse, caught in a vicious circle: hyper inflation (+30%), colossal budget deficit and recession (-2% in 2023, according to the government).
The government, which subsidizes almost all essential goods and services, announced at the end of December a series of measures aimed at reducing the budget deficit.
“From March 1, the measure to update retail fuel prices will come into force”announced the Minister of Finance and Prices, Vladimir Regueiro, quoted by the state daily Granma on its website.
Under this reform, the liter of regular gasoline will increase from 25 Cuban pesos (20 cents) to 132 pesos (1.10 dollars), more than quintupling (+428%).
A liter of super, currently 30 Cuban pesos (25 cents), will cost 156 pesos (1.30 dollars), an increase of 420%.
On the other hand, the price of fuel for transport professionals remains unchanged. An increase in the price of gas has also been postponed.
Mr. Regueiro also confirmed from this date a 25% increase in electricity for the largest consumers. These decisions are part of a series of measures announced in December by the government to try to reduce the budget deficit.
Cuba, whose economy is dominated by state companies, is experiencing its worst crisis in thirty years. The cause is a fall in agricultural production, the strengthening of American sanctions over the past four years and a mixed recovery in tourism following the pandemic.
Cuba’s economy grew 1.8% in 2022, following GDP fell 10.9% in 2020 due to the pandemic, and a slight recovery of 1.3% the following year, according to official figures.
Lack of foreign currency
The announcement of the sudden increase in fuel prices, initially scheduled for February 1, caused long queues in front of Havana gas stations in January.
Alejandro Gil, the Minister of the Economy, then recognized that the government might not continue to sell fuel at prices ” subsidized », while the country, under American embargo, is cruelly lacking in foreign currency.
A few days later, the minister was dismissed from his post. And the authorities finally announced at the end of January the indefinite postponement of the measure, citing a “cybersecurity incident in computer systems”.
Faced with this crisis, Hundreds of thousands of Cubans have left the island over the past two years. An unprecedented bloodletting since the advent of the Revolution in 1959.
Cuba has two official exchange rates, one for individuals at 120 pesos to the dollar, the other for business banking transactions at 24 pesos to the dollar.
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