RIGA - Economics Minister Viktors Valainis (Greens/Farmers) has sent a letter to the Cabinet of Ministers (MK) calling for timely preparations to be made for the possible implementation of support measures in response to fuel prices, the Ministry of Economics (EM) informed LETA.
On Monday, July 27, Valainis sent a letter to the Cabinet of Ministers, informing the government that the situation in the fuel market is becoming increasingly volatile after having been relatively stable. The sharp rise in prices for crude oil and petroleum products on global markets has reignited an upward trend in fuel prices, while persistent high geopolitical uncertainty poses a risk of further price increases.
In his letter, the minister calls on the government to begin preparatory work in a timely manner for the possible activation of support measures. This involves identifying existing and potential sources of funding, as well as preparing potential solutions.
The ministry notes that from July 21 to July 27, the price of Brent crude oil rose by 14.5 percent, while the price of ICE Low Sulphur Gasoil rose by 17.1 percent.
Valainis points out that none of the aforementioned price thresholds have been reached yet, but the rise in fuel prices this week clearly shows that the situation is becoming increasingly tense. In his view, it is necessary to take preventive action rather than wait until a crisis has already occurred. The previously adopted decision to extend the excise tax reduction on fuel is currently helping to mitigate the impact of rising prices.
The minister notes that developing support measures under extraordinary circumstances requires significantly more time, while delayed action can create significant political, economic, and social pressure at a time when residents and businesses are already feeling the sharp rise in costs.
The Ministry of Economics will continue to monitor fuel prices, track developments in energy markets, and, if necessary, propose specific decisions to the MK to ensure a timely and effective response to further increases in fuel prices.
Following the July 21 government meeting, Valainis told LETA that the government has outlined possible scenarios for action in the event the situation were to worsen, and that the government had also discussed support measures to be implemented even under a moderate development scenario.
Valainis noted that the rise in fuel prices has created additional costs in the public sector, including in the interior and health sectors. Therefore, the government will continue to monitor the situation and work to prevent any reduction in the availability of services provided to residents.
Commenting on possible support mechanisms, the minister said that, if necessary, additional funding would be allocated from the state budget.
As reported, a law on limiting the increase in fuel prices, which provides for short-term measures aimed at mitigating the impact of price hikes on the Latvian economy and population, came into force on April 1.
The law provides for a temporary reduction in the excise duty on diesel fuel from the current EUR 467 to EUR 396 per 1,000 liters. For marked agricultural diesel, the excise duty rate is set at EUR 21 per 1,000 liters. The reduced rates are in effect from April 1 to the end of the year.
The rate cut will be effective until the end of this year.
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