After President Trump announced that there will be a two-week ceasefire against Iran - I personally was a little calmer. The basis of the increased fuel prices that we are observing is precisely the military conflict in the Middle East. There is no need to be mistaken - this is the strongest factor that influences the growth of prices, including in our country at gas stations. This was stated in “Hello, Bulgaria” by the caretaker Minister of Finance Georgi Klisurski.
According to him, such an agreement to reduce tension and de-escalate the conflict is certainly among the most important factors for reducing the price of oil. “But there is one big “but” - will this truce hold, what will happen after these two weeks and how will the markets react accordingly? We have seen since the beginning of the conflict, which began in early March, that after the initial rise in prices above $100 per barrel on world markets, in Bulgaria over the past 30 days there has been an almost daily increase in fuel prices - that is, we have observed a gradual increase. I would assume that if there is a decrease now, it will also be relatively gradual", he pointed out.
He explained that the additional costs that the caretaker cabinet foresees in the form of aid due to high fuel prices - are about 125 million euros. "The forecasts for a decrease in GDP growth are about half a percent. If growth of about 3.2 percent was previously expected on an annual basis - now the forecast is about 2.6 - 2.7 percent. This half a percent means about half a billion euros in losses for the economy due to the conflict in the Middle East. And this is assuming that oil prices will not rise above $125-150 per barrel," the Finance Minister said.
Regarding the measures taken by the "Gyurov" cabinet, Klisurski stressed that an attempt was made to "be balanced." "The goal is not simply to find a middle ground between the two extremes - to give more or to give nothing, but to follow the recommendations of the EC and the ECB. Based on the experience of 2022, they advise that the measures be targeted - aimed at the most vulnerable citizens and key sectors of the economy," he said.
And he added: "The EC clearly recommends not to apply broad measures that cover all citizens or all sectors. In my opinion, reducing VAT - including for fuels, is a measure that, in my opinion, is not effective. We saw it in 2022 - when VAT was reduced for certain goods, such as restaurant services or bread, there was no real tangible reduction in prices for consumers. Instead, budget revenues decreased, and part of the benefit remained with traders.