Serbia cuts fuel excise again: diesel 220, petrol 196
The government is trimming fuel excise a second time to cushion crude oil topping 80 dollars a barrel and to keep inflation in check. The pump prices hold until July 17.
- From 3 p.m. today, a litre of euro-diesel at Serbian pumps costs 220 dinars and petrol (BMB 95) 196 dinars, under a price list valid through July 17.
- The government is cutting excise on oil products a second time, by a further 5 percent, bringing the total reduction to 10 percent, in force from July 13 to 19.
- Base excise before the cut stands at 68.40 dinars for petrol and 70.34 dinars for diesel per litre.
- The trigger is escalation in the Middle East and a jump in crude oil above 80 dollars a barrel.
A litre of euro-diesel costs 220 dinars from 3 p.m. today, and unleaded petrol 196 dinars, under a price list that holds at Serbian pumps until July 17. Behind that figure sits a second fiscal move in short order: the government is lowering excise on oil products for the second time to keep the numbers on the pump displays and inflation under control.
The reduction comes in two steps. A first decision trimmed excise by 5 percent, and a new one cuts it by a further 5 percent, bringing the total reduction to 10 percent. The additional cut applies from July 13 to 19. Base excise before the reduction is 68.40 dinars per litre for unleaded petrol and 70.34 dinars for gas oils, that is diesel. After the full 10 percent cut, both items fall by roughly 7 dinars a litre, an amount that is not passed on to the driver at the pump.
How much does the intervention cost the budget?
Excise is the single heaviest levy built into the price of fuel and one of the steadier recurring inflows to the budget. Every dinar of excise that is not collected is revenue the state deliberately gives up in exchange for a lower price on the display. It is a classic trade-off: fiscal revenue for price stability and slower inflation.
The arithmetic scales quickly. Forgoing roughly 7 dinars of excise per litre is multiplied by total fuel consumption over the weeks the measure runs, so the shortfall grows with every litre pumped. The government has not yet published an estimate of the total revenue lost, but the direction is clear: the budget takes on part of a burden that would otherwise fall on drivers. It is the same mechanism as the first excise cut, except that it now applies for a second time in a short interval, which raises the cumulative cost of the intervention.
For the consumer the effect is measurable but limited. The excise cut keeps the pump price lower than it would be had the full jump in the world price passed through to retail, yet it does not push the price below its level before crude rose. At 220 dinars for diesel and 196 for petrol, prices are still higher than in recent weeks, because the excise cut only partly offsets the pressure from world markets.
Why the state is stepping in now
The trigger is external. Escalation in the Middle East and the announcement of continued military action have pushed crude oil above 80 dollars a barrel, and that jump feeds through from world markets to retail within a few days. Without intervention, prices at domestic pumps would track the exchange price almost automatically, since fuel in Serbia is priced by a formula tied to an import benchmark.
President Aleksandar Vucic announced the decision, and the Ministry of Finance confirmed it. The aim is to prevent a sharp rise in fuel prices that would, through transport and logistics costs, drag the rest of the consumer basket higher as well. Fuel is an input cost in almost every good, so holding the pump price is at the same time a defence against inflation.
The open question is how long the budget can carry this burden if crude stays above 80 dollars. Would you rather the state keep cutting excise at the cost of a budget shortfall, or let fuel prices follow the world market freely?
