Cuba raised gasoline prices by more than 500% to deal with budget deficits

As part of economic measures aimed at reducing the budget deficit, the Cuban government has announced that the price of gasoline will rise by more than 500% starting next February 1.

Finance Minister Vladimir Reguero said on state television on Monday that the price of a liter of regular gasoline will rise from 25 Cuban pesos (20 US cents) to 132 pesos (+528%), while the price of super gasoline will rise from 30 pesos. 156 pesos (+520) %),

The government has also announced that foreign tourists will have to pay for petrol in hard currency.

The Cuban government, which supports nearly all basic goods and services, announced in late December a series of measures aimed at reducing the budget deficit at a time when the country is suffering from a severe economic crisis.

According to official data, the Cuban economy contracted by 2% last year, while the inflation rate soared to 30%.

In late December, Economy Minister Alejandro Gil admitted that the government could not continue to subsidize fuel prices at a time when the US-embattled country was suffering from a severe shortage of foreign currency.

Gill said that day, “The country cannot maintain fuel prices that are considered to be the cheapest in the world when compared with prices recognized in other countries.”

On Monday, the Minister of Energy and Mines, Vicente della Ulivi, said the price hike was “aimed at purchasing fuel” and ensuring “sustainable supply”.

The increase will affect “the entire community” in Cuba

Economist Omar Everlini Perez told Agence France-Presse about the increase, “If we compare it with the rest of the world, the price of gasoline is very cheap. But if we compare it with salaries in the country, the new price of gasoline will affect “the whole society,” he said.

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As part of the hike announced on Monday, the government said electricity bills for large consumers in residential areas would increase by 25% from March. The government also hiked gas prices.

The government said in late December that the central bank was studying “what the exchange rate against the dollar should be” and that the peso was devalued twice starting in 2021.

In the black market, the currency exchange rate on Monday reached 270 pesos to the dollar, more than double the official rate of 120 pesos to the dollar.

Cuba, with a population of 11 million, is experiencing the worst economic crisis in its history since the fall of the Soviet Union three decades ago.

Several factors contributed to the escalation of the crisis, notably the effects of the Covid pandemic, Washington's tightening of its economic sanctions on the island over the past four years, and structural weaknesses.

(AFP)

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