The extension of the diesel fuel subsidy for another month was announced by the prime minister during the cabinet meeting, in an effort to contain pressure on transport costs and the supply chain during a period of persistent energy instability.
The measure extends the subsidy on diesel fuel through June as well, but the total benefit for consumers will amount to 15 cents per litre (12 cents before VAT), instead of the previous 20 cents.
The measure carries a fiscal cost of €46 million. The reduction in the subsidy is based on the partial easing of prices compared to the highs seen in March. However, despite the reduction, the final pump price will still be about 30 cents lower compared to levels before the measure was introduced.
Indicatively, as sources from the economic staff explained, the average price of diesel fuel on May 24 stood at €1.818 per litre (with a 20-cent subsidy), compared to €1.882 on April 30 (also with a 20-cent subsidy) and €2.122 on March 31, when no subsidy was in place.
The reduction of the subsidy from 20 to 15 cents, as well as the decision not to issue a new fuel pass, indicates the gradual adjustment of the support policy, as the economic staff attempts to balance fiscal pressure with the need to protect consumers.
The subsidy only on diesel fuel aims to prevent widespread price increases in the market due to rising transport and supply chain costs, since diesel is the main fuel used by professionals and businesses. Thus, maintaining the diesel subsidy, even at a reduced level, is considered a “cushion” against new increases, limiting secondary price hikes in goods and services.
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