Finance Minister Enoch Godongwana has said the government\u2019s costly intervention to shield South Africans from soaring fuel prices is coming to an end.<\/p>\n\n\n\n
In April, the government slashed the general fuel levy by R3 per litre to soften the blow for motorists and businesses after conflict in the Middle East sent global oil prices skyrocketing.<\/p>\n\n\n\n
The intervention came just before the monthly fuel price adjustment and prevented what would have been a far steeper increase in petrol and diesel prices.<\/p>\n\n\n\n
South Africa\u2019s fuel prices are heavily influenced by international Brent crude oil prices and the rand-dollar exchange rate, both of which came under pressure as tensions between the United States, Israel and Iran intensified.<\/p>\n\n\n\n
Treasury and the Department of Mineral and Petroleum Resources later extended the tax relief into May as geopolitical tensions persisted longer than expected.<\/p>\n\n\n\n
However, the support will now be phased out from June, signalling the end of what has effectively been a three-month fuel subsidy for consumers.<\/p>\n\n\n\n
Tabling his budget vote in Parliament on Friday, Godongwana confirmed that the temporary reduction in the fuel levy had already cost the government about R17.2 billion in lost tax revenue.<\/p>\n\n\n\n
\u201cThis is further disrupting an already fragile global economic environment, shaped by trade wars and supply chain vulnerabilities,\u201d he said.<\/p>\n\n\n\n
The minister warned that the government must now reassess its fiscal position amid mounting global uncertainty and continued domestic economic pressures.<\/p>\n\n\n\n
Despite the challenges, Godongwana said Africa had shown resilience in difficult conditions. \u201cSub-Saharan Africa is projected to grow by 4.3%, while South Africa\u2019s economy is expected to grow by 1.8% over the medium term,\u201d he said.<\/p>\n\n\n\n
\u201cThese projections reflect both continued recovery efforts across the continent and the structural constraints that continue to weigh on domestic economic performance.\u201d<\/p>\n\n\n\n
\u201cAgainst this backdrop, the government is closely reviewing the fiscal and economic baseline assumptions underpinning the current framework.\u201d<\/p>\n\n\n\n
Godongwana has previously described the fuel levy relief as \u201crevenue neutral\u201d, arguing that the temporary shortfall would be covered through higher-than-expected tax collections and government underspending.<\/p>\n\n\n\n
\u201cNecessary adjustments will be made during the Medium-Term Budget Policy Statement process to ensure that fiscal policy remains responsive to evolving global and domestic conditions,\u201d he said.<\/p>\n\n\n\n
While international fuel price movements have recently improved, the withdrawal of the levy relief means South African motorists are still facing another painful increase at the pumps next week.<\/p>\n\n\n\n
According to the latest data from the Central Energy Fund, petrol prices have finally shifted into an over-recovery after months of sharp under-recoveries.<\/p>\n\n\n\n
Petrol prices started the month showing an under-recovery of roughly 85 cents per litre, but have since moved into a small over-recovery of between 3 and 8 cents per litre. However, this improvement is far too small to absorb the return of the fuel levy.<\/p>\n\n\n\n
From June, the government will add back R1.50 per litre of the temporary levy reduction, with the remaining R1.50 returning in July when the relief measure fully expires.<\/p>\n\n\n\n
As a result, motorists are still expected to face petrol price hikes of more than R1.40 per litre next week, despite the recent improvement in fuel recoveries.<\/p>\n\n\n\n
Diesel users may see some relief, however. Diesel recoveries have strengthened significantly enough to absorb the phased return of the levy.<\/p>\n\n\n\n
Based on current data, diesel prices could still decline by between R2.30 and R3.00 per litre even after half the levy relief is removed.<\/p>\n","protected":false},"excerpt":{"rendered":"
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