Malaysia cuts fuel subsidies to trim budget deficit, fund welfare
KUALA LUMPUR (AP) - Malaysia's government said on Monday it would cut fuel subsidies for the first time in nearly two years to save RM3.3 billion (S$1.3 billion) annually as part of crucial budget reforms.
Prime Minister Najib Razak said the reductions are needed to trim the budget deficit and strengthen economic fundamentals to boost investor confidence.
Datuk Seri Najib, who is also finance minister, said the government will cut the gasoline subsidy by 20 sen (7.6 Singapore cents) to 63 sen a litre and diesel by 20 sen to 80 sen a litre from Tuesday.
Malaysia spends RM24.8 billion a year on fuel subsidies. The reductions will trim that bill by RM1.1 billion for the four months through December and RM3.3 billion next year. Mr Najib said savings from the subsidy cut will help fund handouts for people on low incomes, which will be announced in the 2014 budget in October.