Tired of inflation? Just check Cuba where fuel prices will go up over 500pc
Business
Power and gas tariffs are also increased as govt tries to tackle budget deficit
LAHORE/HAVANA (Web Desk/AFP) – Energy tariff hikes are now a routine matter in Pakistan as the cash starved country is juggling with the numbers to keep budget deficit in control both because of the economic necessities and the pressure exerted by the International Monetary Fund (IMF).
The Oil and Gas Regulatory Authority (Ogra) has already recommended further increase in gas prices on the top of record hike introduced in November last year – a natural outcome of ending subsidies – to tackle the ballooning circular debt.
Meanwhile, the power tariffs too have already touched the levels never seen before in Pakistan’s history in quest of arresting fiscal deficit, fuelling and sustaining inflation resulting in an unprecedented cost-of-living crisis.
However, what the people in Cuba – one of the few surviving communist states – are going to witness is a “history-making event” itself.
According to AFP, the Cuban announced Monday that fuel prices will soar by more than 500 per cent beginning February 1 – part of a series of economic measures aimed at reducing the deficit.
The cost of a litre of regular gasoline will rise from 25 pesos (20 US cents) to 132 pesos, while the price of premium gasoline will jump from 30 to 156 pesos, Minister of Finance and Prices Vladimir Regueiro said on state television.
Authorities also said tourists to the struggling island nation will pay for fuel in foreign currency.
The government on Monday also announced a 25pc increase in electricity prices for major consumers in residential areas, as well has hikes in costs for natural gas.
It also said the Central Bank was studying a potential new exchange rate against the dollar. The peso has been devalued twice since 2021.
Now just imagine the overall effects on the prices of different items, including food inflation as a result of these government measures due to the shrinking purchasing power.
Cuba's government, which subsidises almost all essential goods and services, announced a series of measures in late December aimed at cutting the deficit at a time of severe economic crisis across the country.
According to official estimates, the Cuban economy shrank by 2pc in 2023, while inflation has reached 30pc.
Late last month, Economy Minister Alejandro Gil acknowledged that the government could no longer sell fuel at "subsidised prices”, with the Communist-led country short of foreign currency and still under a punishing decades-long US embargo.
"The country cannot maintain the price of fuel, which is the cheapest in the world compared to prices in other countries," Gil said.
Cuban gasoline is "very cheap, but if you compare it with salaries in the country, gasoline is very expensive," economic Omar Everleny Perez told AFP, adding that the new price structure will affect "the whole of society."
The island 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 pandemic, tightening of US sanctions in recent years, and structural weakness.
