26 States Back Brazil’s Joint Diesel Subsidy Plan

Overview

• Acting president Geraldo Alckmin said Saturday that 26 states plan to sign up for the diesel price support, with formal commitments due by April 22 and one state yet to confirm.
• The proposal offers a R$1.20 per liter subsidy for imported diesel to blunt price shocks tied to the Middle East conflict, split evenly between the federal government and state governments.
• The design includes a price guardrail in which a state that cuts ICMS, a sales tax, by R$0.32 triggers an extra R$0.32 federal cut to keep pump prices from rising.
• The government’s economic team estimates a fiscal cost near R$1.5 billion per month, and the measure would run for up to two months.
• Officials stress the plan is voluntary to avoid a repeat of 2022’s mandatory scheme that led to lawsuits and left a R$25 billion bill for the federal government.