This enables the government to reduce its petrol subsidy bill, and dish out cash directly to lower-income groups.
PETALING JAYA: A gradual increase in petrol prices is the answer to reducing Malaysia’s fiscal deficit compared to targeted subsidies, and will allow the government to directly assist the lower-income groups, says a think tank.
“The approach involves gradually increasing petrol prices every quarter by 20 sen per litre, or to reach RM1 above the market price within the next two years,” he said during a panel discussion on Malaysia’s long story of fiscal consolidation organised by Malaysian Rating Corp Bhd today. “To me, why bother going to a different system . It’s not proven, it takes a lot of effort, and there will be leakages,” he said, adding the government will likely need to spend more in terms of administration.
Anwar, who doubles as the finance minister, is likely to target narrowing the fiscal deficit – the gap between revenue and expenditure – to 4.28% of gross domestic product from an estimated 5% this year.
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