South Africa said on Tuesday it would extend a fuel tax cut for another two months to cushion the impact of the Iran war on households, but the relief would expire after that and it would compensate for lost tax revenue in other ways.
The International Energy Agency has said the US-Israeli war against Iran has caused the largest oil supply disruption in history, hurting countries like South Africa that import most of their fuel as global energy prices rise.
The government intervened in late March by announcing a one-month cut in its general fuel duty for April and has now extended that relief to May and June.
In April, the levy for petrol and diesel was reduced by 3 rand ($0.1809) per litre, while in May it will be reduced by 3 rand per liter for petrol and 3.93 rand per liter for diesel.
The relief will be halved in June to 1.50 rand per liter for petrol and 1.96 rand per liter for diesel, the finance and petroleum ministries said in a joint statement, adding that the measure was aimed at addressing concerns about high inflation and negative impacts on economic growth.
The government reiterated that the fuel tax cut will not impact the fiscal framework adopted as part of the 2026 budget, as the foregone tax of 17.2 billion rand ($1.04 billion) will be financed through a combination of higher-than-expected revenues and lower spending.
South Africa's central bank flagged fuel-driven inflation risks at its monetary policy meeting in March and has since said market-implied interest rate expectations suggest scope for about two 25-basis-point hikes this year.
Source: reuters