Malaysia's Inflation Might Reach To Around 11% If Fuel Subsidy Is Eliminated – MoF

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz has predicted that Malaysia's inflation rate could reach around 11% if Malaysia removes subsidies for essential commodities such as fuel. 

The information was revealed in a CNN interview on Thursday (4-August-2022). He further stated that there is currently financial room for the nation to continue providing subsidies.

The Ministry of Finance (MoF) has previously stated that although there is still money available to continue providing fuel subsidies, the existing blanket subsidies will still need to be eliminated in favour of a tailored strategy.

In response to the rise in global fuel prices, the government has so far spent close to RM 40 billion on fuel subsidies. Additionally, it has come to light that people from the wealthier T20 group rather than the less fortunate B40 group benefit most from the subsidies.

The MoF is currently conducting a pilot programme to determine the most effective way to put the new targeted fuel subsidy mechanism in place. Using e-wallets is one of the strategies for the study, which might last up to six months.