The government of Cuba announced this Wednesday by surprise that it will apply from this Friday the massive increase in retail fuel prices, of more than 400%, which was going to come into effect on February 1 but was postponed after a cyber attack.
The measure is part of an adjustment plan – which includes strong increases in water, electricity and interprovincial transport rates – with which the Government intends to reactivate the national economy, mired in a deep crisis for three years, and reduce the large public deficit.
According to official media, the announcement was made at a press conference in which two ministers participated and to which the international media accredited on the island were not invited.
Once the increase is launched, regular gasoline will go from the current 25 pesos (CUP) to 132 (from 0.21 dollars to 1.1, at the official exchange rate for individuals).
This means that a Cuban will have to pay 5,280 CUP (44 dollars) to fill a 40-liter tank, when the average state salary barely exceeds 4,200 CUP (35 dollars, at the official exchange rate, but 14.5 in the widespread informal market). .
At the press conference it was also reported that this Friday the increases in water and electricity rates will also come into force, which as a result of the suspension of the fuel increase were also frozen “until further notice.”
The also announced increase in interprovincial transportation (up to 600%) will not be applied for the moment, nor will the 25% increase in the balita (cylinder) of liquefied gas.
In that appearance, the Minister of Finance and Prices, Vladimir Regueiro Aleassured that the Executive is “aware” that the measure has “an inflationary impact”, since fuel “is a cross-cutting product of the entire economy”, according to the official Cubadebate website.
The minister added that the Cuban Government has adopted a “group of decisions” that “attenuate” the inflationary “impact” of this measure, possibly referring to the decision not to apply the planned increases to wholesalers.
The Cuban Government had previously assured that these measures would only be applied when the conditions were met and that vulnerable groups would be supported, although for the moment it has not been publicly indicated who these population groups are or how they will be helped.
Regueiro added that current fuel prices “do not recognize the real costs that the country incurs” when acquiring it abroad: “They were outdated prices and generated subsidies from the State Budget”.
The Cuban Government announced by surprise last December a major adjustment plan with the objective of “correcting distortions” that has generated great controversy in the country due to the difficult situation in which the vast majority of Cubans live.
In addition to these increases, the plan contemplated a new devaluation of the peso, still in the study phase, and the progressive end of universal subsidies for products to make way for a system of aid to people in need.
The island closed 2023 with a contraction in gross domestic product (GDP) of between 1 and 2% (which is still below the 2019 level) and announced that the public deficit this year will be 18.5 %, for the fifth consecutive year in large red figures.
Cuba’s chronic economic difficulties have degenerated three years ago into a serious crisis due to the pandemic, the tightening of US sanctions and decisions in national macroeconomic, commercial and monetary policy. EFE (I)
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