Africa-Press – South-Africa. South Africa has enough fiscal space to extend a fuel-tax cut by two months to cushion consumers from an oil shock triggered by the Iran war, Citigroup said.
The relief would likely cost the government between R10 billion and R12 billion, Gina Schoeman, the bank’s country economist, said in Johannesburg on Thursday.
“We can see a staggered reduction of the fuel price levy for at least another month, if not another two,” Schoeman said.
“That is certainly feasible in terms of fiscal space,” she said, citing prudent spending, an expected revenue windfall from mining taxes, and the National Treasury’s ability to tap contingency reserves.
South Africa’s Finance Minister Enoch Godongwana joined counterparts from other oil-importing nations from Zambia to Kenya in offering relief to consumers after crude prices surged following the near closure of the Strait of Hormuz amid the US-Israel war with Iran.
He cut the fuel levy by R3 per liter for both gasoline and diesel this month. Oil prices have risen by almost a third since the conflict began on Feb. 28.
The Treasury said it would forgo R6 billion in revenue because of the measure, offsetting the shortfall within the fiscal framework approved in the 2026 budget.
It is also working on a broader package of measures to support households.
The oil price surge is likely to push up inflation. Consumer prices rose 3% in February, in line with the central bank’s target, and are expected to peak at 4.3% in April.
The latest data show petrol prices are building an under-recovery of as much as R2.80 per liter, and diesel R8.53 per liter.
Central bank Governor Lesetja Kganyago on Wednesday said policymakers should respond to the inflation shock from the Iran war by ensuring it remains temporary rather than entrenched.
For More News And Analysis About South-Africa Follow Africa-Press
