Prime minister Datuk Seri Anwar Ibrahim has repeated his earlier statement that Malaysia will proceed efforts to take care of the present RM1.99 per litre price of subsidised RON 95 petrol under the Budi Madani RON 95 (Budi95) scheme despite global crude oil prices having climbed to around US$100 per barrel following escalating tensions within the Middle East.
Despite the pressure on global markets, he said the federal government would proceed taking measures to shield Malaysians from rising fuel prices, as The Star reports. “We are going to do our greatest to make sure the worth of RON 95 stays at RM1.99 in order that the rakyat aren’t burdened,” he said.
Last week, Anwar said that the country can hold off for one or two months, but told the civil service, employees and businesses to be wary of the situation, which doesn’t appear like it would be resolved anytime soon.
He reiterated the purpose again in his latest statement, saying that the conflict within the region and disruptions to key shipping routes, including the Strait of Hormuz, could push global costs higher. He noted that the disruption has already significantly affected the movement of oil, gas and essential goods. “This can inevitably increase global costs, including transportation and logistics,” he said.
Individually, the reminder to maintain watch and be prepared for any changes is the fitting approach to the situation that has developed, says CGS International Securities Malaysia chief economist Nazmi Idrus. He said that while the country may give you the chance to take care of the worth of RON 95 at RM1.99 per litre despite the hike in global oil prices, doing so could increase fiscal pressure and affect fiscal consolidation plans.
Despite the restructuring of diesel and RON 95 subsidies, he said that the general subsidy commitment, as a share of gross domestic product (GDP), has remained relatively high in comparison with levels before the pandemic, and that the country’s fiscal deficit and government debt situation require continued fiscal consolidation, Bernama reports.
“At current conditions, a spike within the fuel subsidy costs could potentially overturn the fiscal consolidation trajectory that the federal government has planned. In a way, it is definitely a wise move for the federal government to signal the potential price risk, because it reduces business uncertainties and allows the general public to organize for such eventualities. This is best than keeping quiet,” he told the national news agency.
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This Article First Appeared At paultan.org
