Cuba Faces Crisis as Government Implements 400% Fuel Price Increase

The economic crisis in Cuba has worsened due to an extraordinary increase in fuel prices of more than 400%. This unexpected change has left Cubans unsure of how they will afford gasoline. The increase is part of a strict economic adjustment defended by the communist regime as a necessary price to pay.

The implementation of this measure was initially set for February 1, but a cyberattack on a state company’s digital payment system postponed it for a month.

The EFE agency confirmed that not all service stations were selling fuel this Friday morning. The state company Cimex had earlier warned of a service interruption needed to adjust the prices.

This price increase is part of a significant adjustment plan introduced in December by the Cuban government. The aim is to rejuvenate an economy that is in severe crisis due to both governmental mismanagement and the impacts of the pandemic. The usual condemnation of US sanctions also plays a role.

Regular gasoline has increased from 25 pesos to 132, or from 0.21 dollars to 1.1, at the official exchange rate. Filling a 40-liter tank will now cost 5,280 pesos (around 44 dollars), which is more than the average salary of 4,200 (roughly 35 dollars).

“It is true that the price of fuel in Cuba was below international standards, but also a person’s salary is below international standards,” commented Eduardo Fernández, a 57-year-old philologist, annoyed.

On this March 1st, the increase in electricity rates, was implemented. However, the proposed increase in interprovincial transportation (up to 600%) will not be applied for now, nor will the 25% increase in the liquefied gas bottle.

The adjustment plan includes a new devaluation of the peso and a gradual end to universal product subsidies, shifting towards a system of assistance for those considered vulnerable.

As basic wages in Cuba have depreciated, inflation has risen. Furthermore, the local currency has lost value against the dollar, which serves as a refuge for those who receive remittances from overseas.

Vladimir Regueiro, the Minister of Finance and Prices, affirmed that the Executive is aware of the inflationary impact of the fuel price increase. However, he assured that measures are in place to mitigate this situation.

“The State may have the need to raise prices, but I didn’t think it would be to these levels,” said Andrés Pérez, a Cuban who was waiting in line to buy gas this Friday.

With a contraction in gross domestic product of between 1 and 2% in 2023, Cuba has announced that this year’s fiscal deficit will be 18.5%.

The country’s economic situation is reflected in the shortage of basic goods like food, fuel, and medicine, rampant inflation, frequent blackouts, and an increasing dollarization of the economy. This has resulted in social unrest, leading to protests like the historic one in July 2021 and a mass migration wave to the United States, the largest in decades.

The Covid pandemic has significantly affected Cuba’s primary tourism market, leading to a significant loss of income.

The halt to the thaw that then-Democratic President Barack Obama had promoted, which would have led to an influx of investments to the island, also negatively impacted Cuba. The fading communist regime, even with significant obstacles, extinguished a significant surge in private activities.