Temporary subsidy of the regime does not prevent rise in fuels

Travel by bus, car or motorcycle?: This is how Nicaraguans avoid the high cost of fuel

The first time that “Elena”, an employee of the Mayor’s Office of Managua, traveled from her home to work by bus, she did so out of necessity: her vehicle had a damaged engine. The car was repaired in 15 days, about five months ago. That unforeseen event left the Nicaraguan — who asks to omit her name out of fear — a lesson: “In a fortnight I can save up to 1,500 córdobas on gasoline, if I leave the car at home and go by bus.”

“Elena” —a single mother of three minors— lives on Carretera Norte and works at the Civic Center. For five months she established the routine of traveling by bus to work, because with her salary of about 15,000 cordobas a month, she no longer had enough to “fill the gas tank.”

The situation of “Elena” is not an exception. Nicaragua is the second country in America where consumers buy fewer liters of gasoline with their average salary, according to a study by the private platform Picodi, specialized in savings, discounts and offers.

With an average net salary of 10,390 córdobas —about 290 dollars—, a Nicaraguan bought, until last June, about 212 liters of super gasoline, which represents about 41 liters less than a year ago, according to the web portal, with a presence in Spain. and four American countries.

Worse than Nicaragua is only Cuba, where citizens can buy about 27 liters of gasoline with an average salary of 35 dollars.

Prices frozen on the rise

“Elena” began her routine by interspersing a “week with a car” and a “week by bus”, but she has modified it for her comfort. “On Mondays and Fridays I always go by car, because on those days the buses are always full. From Tuesday to Thursday I use public transport, although if I’m already late for work I have to take the car”, says the citizen.

She used to invest up to 2,000 córdobas every two weeks to fill her gas tank, today she spends half that and “sometimes less, otherwise I use the car on weekends.”

When the worker from the Mayor’s Office began with “her savings system” last February, the average price of super gasoline was 44.01 córdobas per liter, and it was on the rise, since the year began at 41.96 córdobas. However, from the first week of April to date, the value of that fuel is frozen at 48.97 cordobas per liter.

The prices of super, regular, diesel gasoline and liquefied petroleum gas (LPG) have remained frozen as part of an opaque policy of the regime of Daniel Ortega and Rosario Murillo, which has not specified where the funds come from or to what party budget affects.

Ortega has only revealed, last May, that the subsidy for oil derivatives costs, to the public treasury, about four million dollars per week. To date it would be about 68 million dollars for the 17 consecutive weeks.

In addition, to finance this subsidy, a loan was approved in mid-July with the Central American Bank for Economic Integration (CABEI) for 200 million dollars. This millionaire loan will be added to Nicaragua’s external debt, which at the end of 2021 reached 14,308 million dollars, the highest peak during the 15 years of Daniel Ortega in power.

“leave for food”

The fuel freeze has not stopped a rise in the prices of products in the Nicaraguan basic basket, which has increased by 20.3% between May 2021 and May 2022, when it was quoted at 17,332.52 córdobas, according to statistics from the Nicaraguan Institute Information for Development (Inide).

The scarcity of the basic basket made “Manuel”, a salesman for a telephone company, leave his car, a 2000 Mitsubishi Lancer, for a used motorcycle. “My job consists of going from one place to another visiting and looking for clients, so I need my own means of transport, but I could no longer afford a car,” says the young man.

“Manuel” is the father of two children and his wife is unemployed. Every week he spent between 1,500 and 2,000 cordobas on fuel. At the beginning of last June, he sold his car and bought a motorcycle, which “makes about 120 kilometers per gallon”, and “fulea” the tank -13 liters- with 630 córdobas.

“Each month I had less money left for food and household products. I prefer to sunbathe all day on the motorcycle than to stop feeding my children and my wife”, she affirms.

The average price of the ‘food’ component in the basic basket of May last year was 10,026.61 cordobas, and grew by 2,036.11 cordobas, to be valued at 12,062.72 cordobas at the close of May 2022.

Central American panorama

According to Picodi’s analysis, super gasoline in Nicaragua is one of the cheapest in America: it ranks 13th out of the 21 countries included in the ranking.

According to the classification, El Salvador is the Central American country that has increased the price of gasoline the least, between January and June of this year, with 12.6%. Followed by Nicaragua with 16.7%; Honduras with 33.5%; Guatemala, 35.8%; and Costa Rica, 45%.

Colombia and Ecuador are the only countries on the continent where this fuel has become slightly cheaper: −0.2% and −1.0%, respectively. On the other hand, Panama is the anti-leader in the ranking: the price of gasoline has increased by 65%.

In El Salvador, the Legislative Assembly, controlled by President Nayib Bukele, has frozen fuel prices for three months, until the end of August, with the aim of cushioning increases.

To do this, legislators have given the green light to a subsidy for fuel worth 20 million dollars per month, in addition to temporarily suspending two taxes.

In Honduras, where super gasoline is above six dollars a gallon, numerous sectors have demanded a reduction in fuel costs.

One of the latest measures adopted by the government presided over by Xiomara Castro has been the freezing for four weeks of the price of regular gasoline and diesel, and the establishment of a mechanism so that half of the public employees carry out their functions in person. and the other half does it from home.

In Costa Rica there have been no massive protests over the high cost of living, but the price of fuel is at record highs of around 1.5 dollars per liter of gasoline, which has also caused increases in bus fares.

President Rodrigo Chaves has refused to support initiatives to lower the fuel tax, arguing that he does not want to create a hole in state finances and has admitted that the price will not drop substantially because it depends on international factors.

Protests in Latin America

High fuel prices have sparked massive protests in several Latin American countries: Panama, Ecuador, Paraguay and Peru.

Although Ecuador has frozen gasoline and diesel tariffs at 2.55 and 1.90 dollars per gallon, respectively, these values ​​were the main reason for the Indigenous Movement to initiate, in mid-June, protests against the Government.

Although President Guillermo Lasso agreed to reduce prices by 10 cents on the dollar, the indigenous people demanded that gasoline cost $2.10 per gallon and diesel $1.50, rates similar to those of June 2021.

In Paraguay, President Mario Abdo Benítez announced on July 27 that the state oil company Petropar will lower its sales prices for diesel and gasoline, when carriers and truckers began an indefinite strike in protest at the cost of fuel.

Abdo Benítez anticipated that they will offer a “special plan” for the transport sector, of which he did not reveal details.

In Panama, social protests began three weeks ago due to the high cost of fuel and food and led to an outcry against corruption, which protesters, analysts and opposition politicians denounce. The canal country is experiencing its worst social crisis in decades.

The blockades, especially on the Pan-American Highway, which crosses the country and links it to Central America, have caused shortages of food, fuel and other products in urban centers.

Faced with the massive demand, the Government has adopted measures to “guarantee social peace” such as the inclusion of 50 new products in the basic basket and the freezing of the price of fuel at 3.25 dollars per gallon, which represents “a saving of more than 30 %”, according to the Panamanian president, Laurentino Cortizo.

In Nicaragua, despite the fact that a gallon of gasoline exceeds five dollars, demonstrations have been prohibited since September 2018, to avoid massive protests such as those experienced between April and June of that year. Faced with this police state, Nicaraguan users only have to solve a daily dilemma: move by bus, car or motorcycle?



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