LatinNews Daily - 08 August 2022

In brief: Mexico’s gov’t reduces fuel subsidies

*Mexico’s government has announced a reduction in the subsidy for higher octane (premium) petrol despite President Andrés Manuel López Obrador’s promise that consumers would be shielded from rising fuel prices. In an agreement published in the official gazette (DOF), the finance ministry (SHCP) revealed that premium petrol will only receive 92.23% of the subsidy on the special tax on production services (IEPS), which is levied over petrol and diesel among other goods and had been set at a rate of zero, for the week of 6 to 12 August. Standard petrol and diesel will retain a full subsidy costing the Mexican government M$5.49 (US$0.27) and M$6.03 per litre respectively, whilst premium petrol will be subsidised by M$4.28 per litre. This departs from President López Obrador’s statement in June when he guaranteed that the IEPS subsidy would remain in place for the whole year thanks to surplus accrued from crude oil exports. The reduction of IEPS tax on petrol is part of the government’s anti-inflation package.

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