JOHANNESBURG, April 29 (Xinhua) -- The South African government's decision to extend fuel levy relief is a vital response to persistent global energy price pressures and the rising cost of living, according to Raymond Parsons, one of the country's most respected economists.
"To provide further relief and to address concerns of higher inflation and negative impacts on economic growth due to increasing fuel prices, the following relief measures are proposed for May and June 2026," according to a government statement issued on Tuesday.
The government announced on March 31 a temporary reduction in the general fuel levy of 3 rand (about 18 U.S. cents) per litre from April 1 to May 5, to provide limited short-term relief to households from rising fuel prices, following the Middle East conflict.
Parsons, a professor at the North-West University Business School, told local media on Tuesday that the scale of the global oil price shock makes continued partial relief on petrol and diesel both "inevitable and desirable" to cushion households and businesses from negative external developments.
He said the measure is justified on social grounds and supported by available fiscal space, including higher-than-expected tax revenues and planned spending reviews.
"The magnitude of the global energy price shock to the economy makes an extension of the partial petrol and diesel relief inevitable and desirable. It is necessary on social grounds, and because identifiable fiscal space exists through higher-than-expected tax revenues, combined with promised spending reviews," Parsons said.
He estimated the total cost of the relief at about 17.2 billion rand (about 1.4 billion U.S. dollars) by June, saying it remains manageable within South Africa's broader fiscal framework and does not require major changes to the 2026 budget framework.
Parsons added that the intervention could shave about 0.2 percentage points off headline inflation in the coming months, although fuel prices are still expected to rise if global oil prices remain elevated for a prolonged period.
He cautioned that maintaining market confidence depends on ensuring such support measures remain broadly fiscally neutral over time, while fiscal space must be carefully assessed amid ongoing global uncertainty.
"In these acute and uncertain global circumstances, the trade-offs needed to strike the right balance inevitably call for difficult but unavoidable policy decisions," he said.
Parsons also called for an urgent overhaul of South Africa's fuel price regulatory framework through a coordinated ministerial task team, with clear timelines to finalize reforms aimed at reducing pressure on the cost of living and strengthening fuel and food security.
He said South Africa still has room to respond to the global energy shock without undermining fiscal credibility, provided policy decisions are carefully managed. ■
