February 21, 2024

Brighton Journal

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Crisis in Cuba: Miguel Díaz-Canel defends plan to raise fuel prices and cut subsidies for basic basket.

Crisis in Cuba: Miguel Díaz-Canel defends plan to raise fuel prices and cut subsidies for basic basket.
Cuban dictator Miguel Díaz-Canel refers to the regime’s latest economic announcement (AFP/Getty Images)

Dictator of Cuba Miguel Diaz-CanelThe shock plan, announced in the National Assembly (unicameral parliament) this Thursday, promised that citizens would not be affected and justified that the main thing was “economic recovery”.

“We have already said: nothing, nothing we do will affect people,” Díaz-Canel wrote in the Minister of Social Networks. Manuel MarreroIncrease in prices of fuel, electricity, gas, drinking water and other services, in addition to end of universal subsidy on ration card items.

The Cuban dictator said in his message “Our main mission is economic recovery”: “The measures announced yesterday will provide a much needed boost to the economy. And let us build revolution and socialism.

The Cuban regime confirmed for 2024 one of its biggest macroeconomic adjustment plans in decades, which seeks to reduce state spending by raising state-subsidized prices.

Marrero presented the plan in a surprising way and justified it Government cannot continue to “waste” in some grants.

Cuba has been experiencing a severe economic crisis for several years (REUTERS/Alexandre Meneghini)
Cuba has been experiencing a severe economic crisis for several years (REUTERS/Alexandre Meneghini)

Among these increases, a 25% hike in electricity charges for 6% of the residential segment, fueled by foreign exchange tourists.

The cost of water supply will triple for those without a fixed term service and the cost of a LPG cylinder will increase by 25%.

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The Prime Minister has also announced “New fares applicable” for public passenger transport servicesBut without describing the increments.

He announced that next year the Cuban regime would change the official exchange rate of the peso (cup) to the dollar, for which a working group was formed with the Central Bank of Cuba.

From 2021, the official exchange rate is 24 cups per greenback for legal entities (companies) and 120 cups for natural persons.

In the informal market, for its part, the dollar rose to 273 cups.

The Cuban regime will increase the price of basic services and charge tourists in foreign currency for fuel (REUTERS/Alexandre Meneghini)
The Cuban regime will increase the price of basic services and charge tourists in foreign currency for fuel (REUTERS/Alexandre Meneghini)

The Cuban government estimates that Gross Domestic Product (GDP) will contract by 1% to 2% in 2023After forecasting 3% growth earlier in the year.

Inflation in the formal market is estimated to rise by the end of the year (informal inflation is much higher) and the deficit will rise to around 15% of GDP.

To all this must be added the reduction of tourism, one of the island’s main sources of income. Only 2 million foreigners traveled to Cuba this year, compared to an estimated 3.5. By 2024, 3 million are expected, although this number is down from the pre-pandemic 4 to 5 million.

Cuba has been mired in a severe crisis for three years Shortages of basic commodities (food, fuel and medicine), rampant inflation, frequent blackouts and partial dollarization of the economy.This has fueled unprecedented migration and social unrest.

(with information from EFE)