Blanket fuel subsidies to be removed

Rafizi: plan on track to reduce national fiscal deficit

The plan to remove blanket fuel subsidies this year is on track, says Rafizi Ramli (pic). The Economy Minister said the move is to reduce the national fiscal deficit.

The government needs to “manage the sequence” of subsidy cuts with the risk of inflation picking up even before they are implemented, he said in an interview with Bloomberg on Tuesday.

Last year, Rafizi announced the targeted RON95 subsidy programme in the second half of 2024 to optimise its resources for those that need them the most. He had said those in the top 20 (T20) income group were receiving 53% of blanket fuel subsidies, which was unsustainable and unequitable.

Moreover, the blanket subsidies on RON95, which is the most widely used and affordable fuel, have taken up most of the total Rm81bil subsidies handed out in 2023.

The government is on track to focus its handouts on helping the needy, he added.

He also said that the government plans to narrow its budget deficit to 4.3% of gross domestic product this year, up from 5% in 2023.

“In order to reach the fiscal target of 4.3%, a certain timeline has to be followed,” he said.

On Tuesday, the ringgit slid to 4.7800 against the US dollar, nearing its record low of 4.8850 in 1997, following the fallout from the Asian financial crisis.

However, Rafizi is not too concerned about the slide, as it has not dampened interest from foreign investors or hindered the government’s ambitions.

“As far as the Economy Ministry is concerned, we do not see ringgit fluctuations beginning to have a negative impact on our long-term restructuring,” he said.

Rafizi also highlighted that creating one of the world’s “top start-up ecosystems” in Malaysia is key to the government’s efforts.

“Malaysia should be much better as a vibrant place for start-ups, for technology and digital sectors, given all our inherent advantages,” he said.

Meanwhile, Khazanah Nasional Bhd will create a ‘super fund’ along with other sovereign funds to invest in start-ups, which the government hopes will attract venture capital firms to the country.