Economy minister Rafizi Ramli has reportedly confirmed that Malaysia will reduce subsidies for petrol this year in order to reduce the country’s fiscal deficit, Malay Mail reported, citing Bloomberg.

The Malaysian government remains on track in focusing its handouts on aid for the needy, Rafizi said, adding that the government ‘needs to manage the sequence’ of subsidy cuts, as there is a risk of inflation picking up even before the cuts are implemented. “We are sticking to it,” Bloomberg quoted the minister as saying in an interview.

The government aims to reduce its fiscal deficit from 5% in 2023 to 4.3% of gross domestic product (GDP) this year, and Rafizi said that the country plans to phase out blanket subsidies for RON 95 petrol which formed the bulk of the RM81 billion spent by the government last year, according to the report.

“In order to reach the fiscal target of 4.3 per cent, a certain timeline has to be abided. Otherwise the dollars and cents will be off,” Rafizi was quoted by the news outlet as saying.

In Malaysia, only locally-registered vehicles are allowed to use subsidised fuel – currently priced at RM2.05 per litre for RON 95 petrol and RM2.15 per litre for Euro 5 B10 and B20 diesel – and unsubsidised RON 95 petrol went on sale in Perlis in February 2023 at RM3.22 per litre, with diesel at RM3.45 per litre at the time. According to the website for unsubsidised fuel outlet Double, unsubsidised RON 95 sells for RM3.38 per litre as of today (April 17).

Last year, Rafizi stated that the subsidy programme for RON 95 petrol to replace the blanket subsidy programme would be introduced in second half of this year.

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