Havana’s residents express concern over impending changes
At a gas station in Havana, taxi driver Rafael Guiardinú patiently waits in line to fill his tank, anxious about the anticipated rise in gas prices. He wonders how much he should charge his clients when the prices are skyrocketing. “Prices will go up for everything,” he laments, questioning the affordability of even basic items like sweet potatoes.
The Cuban government had planned to implement a significant increase in gas prices, up to 500%, on Thursday. However, the country’s vice minister of economy announced a delay, citing a cybersecurity incident as the reason. This news came as a temporary relief to many, as Cubans were bracing themselves for the financial impact of the hike.
The proposed gas price increase is part of a larger austerity plan introduced in late December. This plan includes raising prices on essential services and goods, cutting subsidies, and increasing taxes on the emerging private sector. While the focus has been on gas prices, there is speculation that other aspects of daily life, such as food prices, could be affected, as they are already burdened by inflation.
Mildred Granadillo de la Torre, the vice minister of economy and planning, argues that adjusting fuel prices will encourage savings and reduce demand, given the high prices of fuel in the international market. For decades, Cuba has subsidized fuel, but the economic situation has forced the government to reconsider this practice.
The impending measures have sparked conversations throughout Havana. People are relieved by the temporary pause in gas price hikes, but the overall cost of living remains a constant concern. The government aims to address the country’s ballooning deficit and lower inflation, which currently stands at around 30%. However, economists argue that the informal black market, where money is exchanged and goods are purchased, operates at even higher rates.
As part of the austerity measures, the government eliminated the one-year tax exemption for new private businesses. Now, all companies, including the growing number of private enterprises, must pay various taxes from the start. This includes a 10% sales tax, a 35% tax on profits, and a 14% tax for social security. These changes significantly impact business owners like Raul Silva, who owns the restaurant Espacios in Havana’s Miramar neighborhood. Silva believes that these measures will hike the prices of the products he sells, hampering economic development.
Further changes are expected to occur in March, including price hikes in electricity, public transportation, and liquid gas fares. These adjustments aim to address Cuba’s fragile economy, which has been grappling with the effects of the U.S. economic embargo and the tourism downturn caused by the pandemic.
To ease anxiety among the population, the government has increased salaries for workers in the health and education sectors. Cuban President Miguel Díaz-Canel has personally visited various provinces to reassure residents that they will not be “abandoned.” Nevertheless, economists like Omar Everleny warn of a complicated scenario in the future, with higher inflation and difficulties in accessing daily necessities.
Cuba’s economic situation has had a significant impact on migration, with nearly half a million Cubans immigrating to the United States since October 2021. This exodus primarily comprises working-age individuals, leaving behind an aging demographic.
While some economists, such as Pavel Vidal, support the austerity measures as necessary to reduce subsidies and the fiscal deficit, they emphasize the need for the government to stimulate economic growth and diversify the economy. However, the government has been reluctant to open up and embrace diversification.
As anxieties rise, people like Yuriel Milanés, who works at a state-owned produce market, express concern about the impact of rising gas prices on vegetable prices. Milanés relies on public transportation to commute and worries about the added expense when fares increase. Many Cubans share this sentiment, feeling that their salaries do not match the rising costs of gas and other essential products.
The road ahead seems challenging for Cubans as they navigate the effects of austerity measures and price hikes. What remains to be seen is how the government will balance economic stability while ensuring the well-being of its citizens.