The Cuban government raises gasoline prices by more than 500%

HAVANA (AFP) – The Cuban government announced on Monday that the price of gasoline will rise by more than 500% starting February 1 as part of economic measures aimed at reducing the budget deficit.

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

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

The Cuban government, which subsidizes nearly all basic goods and services, announced in late December a series of measures aimed at reducing the budget deficit as the country grapples with 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 to 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 “stable supplies”.

Commenting on the increase, the economist said:

Omar Everlin Perez told Agence France-Presse, “If we compare to the rest of the world (…) the price of gasoline is very cheap. But if we compare it to the salary in the country, the price of gasoline is very high. High.”

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He added that the new price would affect “the whole community”.

As part of the hikes announced on Monday, the government said electricity rates for large consumers in residential areas would increase by 25% from March.

The government also announced to increase gas prices.

The government said in late December that the central bank was studying “what the exchange rate against the dollar should be,” noting that the peso has been devalued twice since 2021.

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

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