KUALA LUMPUR, Oct 27 — Putrajaya said today that only those drawing in monthly salaries below RM10,000 will be eligible to receive fuel subsidies.
According to The Star Online, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said Putrajaya’s targeted subsidy scheme for next year will be divided into three tiers.
“Those earning below RM5,000 per month will receive full subsidy while those earning between RM5,000 and RM10,000 will get a partial subsidy,” he was quoted saying by the news portal after officiating the Bank Rakyat International Islamic Banking Conference here.
The minister added, however, that the full mechanism is still being studied by the Domestic Trade, Cooperatives and Consumerism Ministry.
In his Budget 2015 speech earlier this month, Prime Minister Datuk Seri Najib Razak said the government will roll out a new subsidy scheme designed specifically to benefit the country's low to middle-income earners.
The switch from blanket to "targeted" subsidies, as well as the continuation of cash handouts to the poor, are necessary measures to reduce Malaysia’s budget shortfall while still maintaining a “pro-rakyat” budget, Najib had said a day earlier, when explaining his government's cost-cutting moves.
To address concerns over its burgeoning debt burden, Putrajaya forged ahead with its subsidy rationalisation programme early this month, announcing a cut of 20 sen per litre in subsidies for the RON95 petrol and diesel.
Malaysia’s national debt, currently at 54.6 per cent of GDP, hovers just below a critical legal ceiling and is jointly ranked with Pakistan as having the second highest debt-to-GDP ratio among 13 emerging Asian markets after Sri Lanka, according to data compiled by Bloomberg.
Ratings agency Fitch also maintained Malaysia’s sovereign debt outlook at “Negative”, rating Malaysia’s long-term foreign currency sovereign debt at A minus, which is the last rung of the upper-medium grade ratings.
According to the Domestic Trade, Cooperative and Consumerism Ministry, the latest round of fuel subsidy cuts was necessary as the government needs to trim its fiscal deficit in stages as it has been doing since last year, from 3.9 per cent of the GDP to 3.5 per cent this year, and 3.0 per cent in 2015.