Finance Ministry Rejects Diesel Subsidy Cuts as Main Cause of Manufacturing Sector Cost Increase

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Finance Ministry,Diesel Subsidies,Manufacturing Costs

The Ministry of Finance (MoF) has clarified that the planned reduction in diesel subsidies from June 2024 is not the primary factor behind the increased costs of goods in the manufacturing sector. This clarification follows the slight decline in the Purchasing Managers' Index (PMI) from 49.9 points in June to 49.7 points in July 2024. The MoF attributes the decrease to various economic risks, including lower external demand, decreased purchasing and inventory activities, and disruptions in supply chains.

: The Ministry of Finance has emphasised that the targeted rationalisation of diesel subsidies starting in June 2024 is not the main cause of the rise in costs of goods in the manufacturing sector, which led to the decline in the Purchasing Managers’ Index in July 2024.

These include factors such as weaker external demand, reduced purchasing and inventory activities by firms, and supply chain disruptions. The highest PMI reading for the manufacturing sector in 2024 was recorded at 50.2 points in May 2024 , while the lowest reading was 48.4 points in March 2024 , the ministry added.

 

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