MoF: Removal of fuel subsidy might worsen Malaysia's inflation to around 11%

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz projected that Malaysia’s inflation may reach around 11 percent if the country removes subsidies for essential items like fuel.

The revelation came during an interview with CNN on Thursday (4-August-2022). He also added that the country currently still has fiscal space to continue giving subsidies.

However, in a previous report, the Ministry of Finance (MoF) confirms that while there are still sufficient funds to continue giving fuel subsidies, the current blanket subsidies will still need to be removed in favour of a targeted approach.

So far, the government has spent nearly RM 40 billion on fuel subsidies amid the rise in global fuel prices. It has also been revealed that most of the subsidy is enjoyed by those from the wealthier T20 group rather than the poorer B40 group. 

Also read: Finance Minister: There are still enough funds to continue fuel subsidy

At the moment, MoF is running a pilot programme to study the best way to implement the new targeted fuel subsidy mechanism. The study will take up to 6 months and one of the methods includes using e-wallets.

Also read: MoF: Current revenue not enough to cover RM 40 billion subsidy costs; Unable to sustain blanket subsidies

Also read: Up to 6 months study needed before MoF can implement new targeted fuel subsidy mechanism

Also read: MoF: E-wallets under trial for targeted fuel subsidy