South African President Cyril Ramaphosa announced that the National Treasury is exploring possible measures to alleviate the burden of rising fuel prices on the cost of living. Ramaphosa mentioned that these options might be disclosed in Finance Minister Enoch Godongwana’s upcoming medium-term budget statement scheduled for Wednesday.
Record Petrol Prices
Recent adjustments have driven petrol prices in Gauteng province to a new high of 30.95 rand per litre. This increase, attributed to constrained global oil supplies amid ongoing tensions between the United States and Iran, has resulted in petrol prices rising by nearly 50%, while diesel fuel has surged by 72%.
Ramaphosa acknowledged that increasing fuel costs represent a global issue and emphasized that the government is considering its options carefully. He cautioned, however, that implementing large-scale subsidies or reducing the general fuel levy could lead to revenue losses that would impact funding for vital state programs and public services.
During a previous spike in fuel prices, the government allocated approximately 24 billion rand to a subsidy program. Before the significant price increase in April, the Treasury had reduced the general fuel levy by 3 rand per litre to help mitigate the effects of rising costs. This decision was projected to result in a revenue shortfall of 17.2 billion rand, funds that are typically used for essential services such as healthcare, education, and policing.
Ramaphosa noted that any new measures would require careful budget assessments due to their potential impact on the country’s fiscal position and reserves. According to a forecast from Bank of America, South Africa’s revenue for the 2026/27 financial year is expected to surpass earlier projections by 70 billion rand, a trend primarily driven by increased corporate tax receipts from the gold and precious metals sectors.
Sanlam Investments economist Patrick Buthelezi highlighted that measures such as a three-year wage agreement, caps on the number of civil servants, and a voluntary early retirement program could contribute to managing the public wage bill. However, he also pointed to growing pressures to reduce public debt and the conceivable impact of falling commodity prices on future revenue.
The South African government is expected to continue assessing these economic challenges as rising fuel prices influence broader cost-of-living concerns across the country.
