The Minister of Economy, Rafizi Ramli stated that the reduction of fuel subsidies will begin this year.
He said the move is to reduce the country’s fiscal deficit in an interview with Bloomberg last Tuesday.
He also said the move was needed to “manage the sequence” of subsidy cuts, given the risk of inflation rising before the cuts are implemented. Since last year, Rafizi said he wanted to implement the RON95 subsidy program which was targeted in the second half of 2024 so that it would be delivered to those who needed it. For now, the T20 group is taking the opportunity to receive 53 percent of the existing oil subsidy system.
Of the RM81 billion subsidy budget for 2023, the subsidy for RON95 petrol has taken up a large portion of it.
During the interview, he said the government plans to reduce the budget deficit to 4.3 percent of gross domestic product this year, up from 5 percent in 2023.
“To achieve the fiscal target of 4.3 percent, certain timelines need to be adhered to,” said the Pandan Member of Parliament.
Our opinion is that the government must have a mechanism to reduce the impact of fuel price increases in the future because there will be parties who take the opportunity to increase the prices of other goods. Withdrawal of subsidies from those who do not need it is a good move but it must be done carefully so that the less fortunate are not affected.
