PM Bolojan: The government does not benefit in any way from rising fuel prices; on the contrary

Premier Ilie Bolojan stated on Saturday that a prolongation of the war in the Middle East and the effects of blocking crude oil and petroleum products transport from the Persian Golf determine a lower economic growth everywhere in the world, with ascending inflation at global level and the government has no benefit from rising prices for fuel, on the contrary, the country’s finances lose due to the economic crisis.“All countries in the global economy will be affected, and Romania is no exception. We cannot eliminate these effects; we can only limit the costs as much as we are able,” the prime minister stated in a message posted on his Facebook page on Saturday.   He emphasizes that 'the government derives no benefit from rising fuel prices'; on the contrary, the additional tax revenue generated by higher gasoline and diesel prices is far less than the cost of the crisis to public finances.   'According to the Ministry of Finance's estimates, the increase in VAT revenue would generate between 100 and 110 million lei in additional revenue per month, based on an average fuel price of 10–10.2 lei. This is because less than half of fuel sales are to individuals, while more than half are to businesses that deduct VAT (...) The oil price crisis has even greater indirect costs for the economy. The general rise in prices reduces consumption, slows economic growth, and affects government revenue. In addition, there is an extra cost to the state due to rising interest rates; since the start of the crisis, interest rates on public debt have risen by up to 1 percentage point. If the period of instability drags on, interest costs could rise significantly, affecting the budget balance,” Prime Minister Bolojan points out.   At the same time, he shows that the government acts within the limits of possibilities which it has ‘as a result of the huge budgetary deficits of the previous years and constraints of the present’.'In March, for transport companies, we increased the excise tax that will be reimbursed to them this year by nearly a third. For the budget, this represents an expenditure of over 600 million lei this year. For farmers, the reimbursement of the 2.7 lei/liter excise tax has been extended for this year as well,' he adds.   “This represents a budgetary effort of over 1.5 billion lei this year, of which over 500 million lei are payments for the last months of last year. Support for farmers has an impact on both the sector’s competitiveness and food prices. We have limited the markup in the coming months to last year’s average level in the fuel sector to prevent speculative price hikes. This has primarily limited fuel price increases at the refinery level. As a result, this week, for products coming out of the country’s refineries, price increases were limited or prices even fell. This was reflected in prices at gas stations, at some gas station chains,” specified Ilie Bolojan   According to him, the reduction of 11% of the standard Diesel excise, namely 30 bani per liter is what the government affords at the present. ‘ It is not a huge reduction, but it is what we afford to do now. For consumption of almost 700 million liters monthly, this means a budgetary effort of approximately 200 million lei monthly. Why diesel fuel only? In Romania, the diesel fuel consumption represents over 75% of the total fuel consumption, gasoline is under 25%. Moreover, for diesel fuel the price increases were double against those for gasoline. Similarly, the diesel fuel cost affects the price of goods and people transport, the cost for construction and industry machines and equipment functioning, prices in the economy in general, and implicitly, the cost of life’ says the head of government. (Photo:https://gov.ro/)