Cubans hit by fuel hike

COMMUNIST GOVERNMENT SEEKS TO CUT BUDGET DEFICIT Nation of 11m people in worst economic crisis since the fall of Soviet bloc.

Already under the yoke of inflation and product scarcity, many Cubans don’t know how they will cope with a new 500% surge in the fuel price. The communist island’s cashstrapped government announced the five-fold increase on Monday with effect from 1 February, as part of a series of measures seeking to cut its budget deficit.

The cost of a litre of regular petrol will rise from 25 pesos (about R27) to 132 pesos, while the price of premium petrol will jump from 30 to 156 pesos, it said.

To buy 10 litres of fuel for his motorbike – enough for a week – Domingo Wong told AFP he would now have to fork over half his monthly salary of about $21 (about R390).

“Ten litres is what I use in a week without doing anything special, just the daily: going to work, bringing my daughter to school, visiting my sister,” the 57-year-old building guard said as he waited patiently in line to fill up his bike.

State-owned companies and private carriers will be able to buy fuel “at wholesale prices”, which will increase by 50%, Transport Minister Eduardo Rodriguez said on Tuesday.

He added that most public transport fares will maintain “their current prices”, but announced major increases in domestic airline tickets and inter-province bus fares.

The nation of 11 million people is experiencing its worst economic crisis since the collapse of the Soviet bloc in the 1990s, due to consequences of the Covid pandemic, the tightening of United States sanctions in recent years and structural weaknesses in the economy.

According to official estimates, the Cuban economy shrank by 2% in 2023, while inflation reached 30% in 2023.

Independent experts say this is likely an underestimation. Fuel and other basics are already hard to come by.

Cuba’s government, which subsidises almost all essential goods and services, already intimated last month it would have to increase fuel prices.

“The country can not maintain the price of fuel, which is the cheapest in the world,” said Economy Minister Alejandro Gil.

The government on Monday also confirmed a 25% rise in the price of electricity for major residential consumers – as well as an increase in the price of natural gas.

Many Cubans now fear even worse inflation.

“Prices in general will increase because even the food we eat depends on transport,” said motorbike taxi driver Rafael Olivier, 21.

Javier Vega, a 33-year-old driver for an e-hailing company, said he feared the effect on trip prices in a country where public transport is already limited due to a shortage of fuel and car parts.

Energy Minister Vicente de la O Levy said the price hike was meant to curb shortages, “to buy fuel” and have “a stable supply.”

Authorities also announced tourists will now pay for fuel in foreign currency, also in short supply, and said the Central Bank was considering adjusting the exchange rate against the dollar.

The peso has been devalued twice since 2021.

Economist Omar Everleny Perez told AFP that fuel may be cheap in Cuba compared to the rest of the world “but if you compare it with salaries in the country, it is very expensive””

Independent worker Juan Antonio Cruzata, 59, said their purchasing power was not enough, and “it will affect all of us”.

The average Cuban salary is the equivalent of about $40 per month. –

Increase is meant to ensure stable fuel supply