Why Cuba is increasing fuel prices by more than 500%?

The Cuban government has announced a substantial increase in gasoline prices as part of broader economic measures to address the budget deficit amid a severe economic crisis.

2024 01 09T182201Z 400004950 RC2DE5A8NX0O RTRMADP 3 CUBA FUEL scaled
A man pushes his car while waiting along with others to fill up at a gas station, as the government announced it will hike the retail price of its 94 octane gasoline from 30 to 156 pesos per litre beginning February 1, in Havana, Cuba January 9, 2024. REUTERS/Yander Zamora

The Cuban government has announced a significant increase in gasoline prices, set to take effect on February 1, as part of a series of economic measures aimed at addressing the budget deficit.

Regular gasoline is slated to rise from 28 Cuban pesos (20 US cents) to 132 pesos, marking a staggering 528% increase, while super gasoline will climb from 30 to 156 pesos, representing a 520% hike.

The Minister of Finance and Prices, Vladimir Regueiro, made this announcement on state television on Monday. As part of these changes, authorities have specified that tourists will be required to pay for gasoline in foreign currency. The government, which has historically subsidized essential goods and services, disclosed a set of measures at the end of December to tackle the budget deficit amid a severe economic crisis in Cuba.

Official estimates suggest a 2% contraction in the Cuban economy in 2023, accompanied by a 30% inflation rate. Economy Minister Alejandro Gil acknowledged in late December that the government cannot sustain selling fuel at “subsidized” prices, especially considering the longstanding U.S. embargo, necessitating foreign exchange. “The country cannot uphold fuel prices, which are the most inexpensive globally when compared to prices in other nations,” he declared.

While gasoline in Cuba is considered very cheap, when compared to the country’s wages, it is deemed extremely expensive. Analysts argue that the newly proposed price structure will have a profound impact on the entire society.

In addition to the fuel price adjustment, the government announced a 25% increase in electricity prices for significant consumers in residential areas, along with hikes in the cost of natural gas.

The government has also revealed that the Central Bank is currently exploring a potential new exchange rate against the dollar. The peso has undergone two devaluations since 2021.

Facing its most severe economic crisis since the collapse of the Soviet bloc in the 1990s, Cuba, with its population of 11 million, is grappling with the repercussions of the COVID-19 pandemic, heightened sanctions imposed by the US government in recent years, and inherent weaknesses and vulnerabilities in its economic and political system.

More from Qonversations

News

antusias penonton fiba world cup di indonesia arena gbk 3 169

GBK declared first sport venue to use 100% renewable energy

News

AFP 20240218 34JM2XT v1 HighRes GermanyDiplomacyPoliticsSecurityMsc

Why Palestinian Authority’s prime minister and government have resigned

News

2024 02 23T100701Z 1 LYNXNPEK1M0A2 RTROPTP 4 GERMANY CANNABIS

Germany legalizes cannabis

News

feb1ad24 1558 444d 8e7d f6aa6ad72ce7

4-month-old Indian baby stuns world with special talent

Front of mind
Screenshot 2024 02 09 at 10.47.42

How to win elections in Africa – Chike Ukaegbu

Ismail Akwei

Presidential elections in Africa have gone through many cycles since the 1950s when Ghana became the first country […]

Read more
Screenshot 2024 01 21 at 07.33.15 scaled

How China can help revive agribusiness in the Caribbean

Eleanor Sa-Carneiro

Against the backdrop of the Caribbean, Trinidad and Tobago’s Fine Cocoa Company is setting sail into the waters […]

Read more