KUALA LUMPUR, Nov 2 — Despite introducing the controversial Goods and Services Tax (GST) in Budget 2014, doubts still remain over the Barisan Nasional administration’s resolve to slash Malaysia’s fiscal deficit, Singapore’s Straits Times (ST) reported today.

The Singapore newspaper noted that ratings agencies like Moody’s Investors Service had questioned Putrajaya’s ability to execute its fiscal policy strategy, due to ordinary Malaysians pinning their hopes on the government to do more to control the rising cost of living.

“And now that the general election and the Umno polls are over, he may even raise petrol prices again next year and possibly also gas and electricity rates before the election season comes round again,” the Singapore daily noted, referring to Prime Minister Datuk Seri Najib Razak.

But it pointed out that there was still some doubt about whether the government has the steel to take things through.

During the tabling of Budget 2014 last month, Najib announced that the GST would be implemented at 6 per cent starting in 2015, and that the consumption tax would replace the narrower sales and service tax of 16 per cent.

Najib had also introduced other measures to cushion the blow of the GST and subsidy cuts by lowering income tax by 1 to 3 per cent and increasing its cash handouts under the popular 1 Malaysia People’s Aid (BR1M) programme.

Putrajaya aims to reduce the fiscal deficit to 4 per cent of the gross domestic product (GDP) this year, 3.5 per cent next year, 3 per cent in 2015, and to finally reach a balanced budget by 2020, after running at a deficit for the past 15 years.

Malaysia also runs a relatively high government debt of 53 per cent of the GDP, just under its self-imposed ceiling of 55 per cent, and has one of Asia’s highest household debt levels at over 80 per cent of the GDP.

ST pointed out today a 27-year-old Malaysian woman’s open letter to Najib, which had gone viral on Facebook, where she pleaded with the prime minister to empathise with young people on their struggles to cope with the rising cost of living.

“In her letter, Ms Siti Hajar Aladin gave a breakdown of living costs for a new graduate earning a typical RM2,200 a month. After deducting food, lodgings, petrol and highway tolls, there was little left,” the newspaper reported.

Many basic necessities are exempted from the GST, such as rice, cooking oil, taxi fares, bus tickets, healthcare services, as well as the sale and purchase of residential properties.

“Still, consumer groups want more exemptions — such as canned sardines, bread and biscuits. But add too many exemptions and that would erode revenues, defeating the purpose of a new tax,” the daily reported.

“Mr Najib will need to find the right balance, in order to burnish his credibility with both international investors and Malaysian voters,” added the daily.