Israeli government has announced a significant reduction in the fuel subsidy - price will stay unchanged

Israeli government has announced a significant reduction in the fuel subsidy, slashing it from 70 agora per liter to 40 agora. This change, effective Thursday night until December 22, is expected to result in a loss of tax revenue amounting to NIS 89 million.

Contrary to expectations driven by a recent drop in the dollar exchange rate and global oil prices, the price of a liter of 95 octane fuel will remain unchanged at NIS 6.94 per liter in self-service. The decision to maintain the current fuel price is attributed to the Ministry of Finance's choice to lower the subsidy rate instead of passing on the anticipated reduction in costs to consumers.

The fuel subsidy has been a longstanding measure, in place for a year and a half, resulting in a cumulative increase of over a quarter of a billion shekels since its initiation in the spring of 2022. Originally introduced by the previous government, the subsidy involved a substantial reduction in fuel tax, lowering it by up to a shekel per liter.

The Minister of Finance has signed an order to continue reducing the tax on fuel, albeit at a reduced rate of 40 cents per liter. This order is currently open to public comments until tomorrow afternoon, after which it will be forwarded to the Ministry of Energy. Gas stations will be informed that despite the subsidy reduction, fuel prices will remain unchanged throughout December. This decision comes amid a complex economic backdrop marked by fluctuations in currency exchange rates and global oil prices.