The average value of fuels for sale in Cape Verde has dropped by more than 10% today, but remains almost 20% above the prices practiced a year ago, according to the Multisectoral Regulatory Agency for the Economy (ARME).
In a statement, ARME states that the update of maximum fuel prices in Cape Verde for January took into account the introduction of changes to legislation, namely on imports, after the Government suspended the setting mechanism in April, May and June prices, given the economic crisis caused by the war in Ukraine.
Already in December, the average price of fuel had dropped by 7%, according to ARME.
The fuel price update incorporates changes to the Import Duty (DI) and Special Consumption Tax (ICE) rates and implies an increase in the DI rate on gasoline from 10% to 20%, maintaining the rate reduction of ICE on diesel and gasoline, 10% for the specific Esc6.0 (€0.5) per litre.
According to the new maximum price list, which will be in force until January 31, a liter of normal diesel is now sold in Cape Verde at Esc138.80 (€1.25), a decrease of 11.65%, gasoline at Esc129.50 (€1.17), minus 10.01%, oil at Esc152.50 (€1.37), minus 8.90%, and marine diesel at Esc108.60 (€0.98), minus 12.77%.
Diesel for electricity – fossil fuel plants provide almost 80% of the electricity produced in the archipelago – dropped 12.36%, to Esc129.80 (€1.17) per litre, while butane gas is now sold from Esc414 to Esc7,994 escudos (€3.73 to €71.8), for bottles of three to 55 kilograms, minus 7.86%.
“All in all, it corresponds to an average decrease in fuel prices of 10.73%,” says ARME.
When compared to the same period in January 2022, the average change in fuel prices “corresponds to an increase of 20.50%,” adds the regulator.
The Prime Minister of Cape Verde estimated, at the end of July, at Esc8.0 billion (€71.8 million) the State investment to stabilize prices of essential goods and energy, without which inflation would exceed 11% this year.
“Without the price stabilization measures, inflation could be situated, this year, at 11.3%, well above the 7.9% estimated. Price stabilization measures have softened the impacts on consumers, organizations and companies,” said Ulisses Correia e Silva, in the National Assembly, at the opening of the annual debate on the state of the Nation, alluding to the consequences of the inflationary crisis that affects the country after the war in Ukraine.
In fuel, he underlined, “without the measures taken by the Government” since April, the average increases “could have been between 18 and 21%,” adding that “because of the measures, they were between 2.6 and 4.1%,” avoiding “serious consequences for people and companies.”
“More than Esc5.0 billion [€44.8 million euros] until December of this year will be the necessary investment for the Government to face the inflationary crisis in energy, stabilize fuel and electricity prices, in a way to prevent values from reaching catastrophic levels for families and companies,” he underlined.
The archipelago is facing a deep economic and financial crisis, due to the sharp drop in tourist demand – a sector that guarantees 25% of the archipelago’s Gross Domestic Product (GDP) – since March 2020, due to the covid-19 pandemic.
In 2020, it experienced a historic economic recession, equivalent to 14.8% of GDP, followed by growth of 7% in 2021 driven by the recovery in tourist demand. For 2022, due to the economic consequences of the war in Ukraine, namely the rise in prices, the Cape Verdean government lowered its growth forecast from 6% to 4%, which in October it revised upwards to 8% and has already at the end of December to 10 to 15%.
With information from Notícias ao Minuto