Cuba Implements Drastic 500% Fuel Price Surge: Economic Measures Unveiled to Tackle Crisis

In a bid to address its economic woes, the cash-strapped Cuban government has announced a substantial hike of over 500 percent in fuel prices, effective February 1. The Minister of Finance and Prices, Vladimir Regueiro, revealed that regular gasoline prices will surge from 25 pesos to 132 pesos per liter, and premium gasoline will jump from 30 to 156 pesos. Notably, tourists visiting Cuba will now be required to pay for fuel in foreign currency.

These measures come as part of a broader economic strategy aimed at curbing the deficit in a country grappling with severe economic challenges. The Cuban economy contracted by an estimated 2 percent in 2023, coupled with a staggering 30 percent inflation rate. Economy Minister Alejandro Gil recently acknowledged the inability to sustain subsidized fuel prices due to a shortage of foreign currency and the enduring impact of the long-standing US embargo.

Cuban economist Omar Everleny Perez highlighted the relative affordability of Cuban gasoline globally but emphasized that, when compared to local salaries, it becomes relatively expensive. This move to adjust fuel prices is expected to have far-reaching implications across Cuban society.

In addition to the fuel price surge, the government announced a 25 percent increase in electricity prices for major consumers in residential areas and heightened costs for natural gas. The Central Bank is also exploring a potential new exchange rate against the dollar, having already devalued the peso twice since 2021.

With a population of 11 million, Cuba is currently facing its most severe economic crisis since the collapse of the Soviet bloc in the 1990s. The crisis is attributed to the ongoing pandemic, tightening US sanctions, and inherent structural weaknesses in the country.

Source: News Point”