The federal government of Brazil announced a series of measures on Thursday (12) aimed at reducing the impact of rising fuel prices linked to the ongoing conflict in the Middle East. According to Finance Minister Fernando Haddad, these measures will likely cost around R$ 30 billion by the end of the year. To finance this package, the government plans to implement a temporary 12% export tax on oil. This strategy is part of a broader effort to control fuel prices amidst international volatility that could threaten domestic economic stability.

President Luiz Inácio Lula da Silva signed a provisional measure to eliminate the PIS and Cofins taxes on diesel fuel, alongside establishing subsidies for both producers and importers. The government estimates that these tax exemptions, combined with subsidies, could lower diesel prices at the pump by approximately R$ 0.64 per liter. This move is particularly significant as rising fuel prices would escalate transportation costs, potentially triggering inflation across various sectors of the economy.

Minister Haddad emphasized that the figures presented are approximate and dependent on fluctuating market conditions. This package is part of the Lula administration's commitment to protecting Brazilian consumers and businesses from external price shocks while balancing fiscal responsibleness by introducing a temporary export tax. The implications of these policies suggest a proactive approach in managing domestic economic challenges, while highlighting the government's sensitivity to global geopolitical events.