Govt Still Studying RON95 Petrol Subsidy Rationalisation

The government is currently studying the need for rationalising subsidies for RON95 petrol, according to the Minister of Economy, Rafizi Ramli.

For now, however, the focus and priority will be on implementing diesel subsidies, which started on June 10, until the targeted subsidy stabilises and achieves its set objectives while strengthening the country's fiscal sustainability and reducing leakages in diesel subsidy distribution.

He further noted that as announced by Prime Minister Datuk Seri Anwar Ibrahim, the prices of goods will not continue to rise after the targeted subsidies are in place.

Rafizi went on to say, "Savings from the subsidy retargeting initiative will be returned to the people through the implementation of programs and projects that provide more significant benefits and are truly needed by the public, such as improvements in the provision of social services and public facilities, including health, education, transportation, and security."

Additionally, in response to Paya Besar MP Datuk Mohd Shahar Abdullah, who is also the former deputy Finance Minister, Rafizi stated that the realignment of fuel subsidies is expected to impact the national inflation rate. However, he mentioned that a well-structured strategy, along with targeted cash assistance, will help mitigate this impact.

For example, the government continues to provide subsidies and maintain diesel prices at RM2.15 per litre for 23 types of logistic vehicles through the Subsidised Diesel Control System (SKDS) 2.0. Additionally, the diesel price remains at RM1.88 for land public transportation service providers while the rate of RM1.65 is maintained for fishermen.

Rafizi further noted that the government's fiscal position is becoming increasingly challenging, necessitating a commitment to retargeting subsidies, which is one of the main components of the operating budget.

"The overall welfare of the people remains a priority. Therefore, the government must choose a subsidy retargeting method that balances the goal of improving the fiscal position and at the same time, reducing the impact on the cost of living borne by the people," he said.

With regards to mitigation measures, Rafizi stated that based on projections made by several international organisations such as S&P Global, EIU, and Bloomberg, the average global price of Brent crude oil is projected at US$85 (RM400) per barrel for 2024.

"However, if oil prices rise sharply, the government, through the Ministry of Finance, BNM, and the Ministry of Economy, will review the situation according to current needs. This is to ensure that the people, especially the low-income groups, are not burdened by any price changes," he said.

Source: Berita Harian