Malaysia is amending plans to cut subsidies on the country’s most popular fuel, while also providing cash handouts as Prime Minister Anwar Ibrahim moves to help people with the cost of living. In a support package unveiled in a televised briefing Wednesday, Anwar announced a payout of 100 ringgit (about $24) to Malaysians aged 18 and above. The country will also effectively continue to help people pay for RON95, the cheapest and most popular fuel, reducing it to 1.99 ringgit per liter from 2.05 ringgit per liter for locals. “The government is sticking to its plan for targeted RON95 petrol subsidies with details to be announced end-September,” Anwar said. “What’s certain is that just like the approach of targeted electricity subsidies, the government gives its assurance that ordinary citizens won’t be affected. In fact let me announce that the RON95 petrol price will fall for citizens.” The package, which Fitch Ratings said should only cost 0.1% of gross domestic product, aims to soften the blow from an expanded sales and service tax that took effect July 1. But it effectively dilutes a subsidy rationalization plan that would have removed RON95 subsidies for the wealthy, as Anwar faces criticism that he’s not doing enough for Malaysians facing higher prices. A rally demanding Anwar’s resignation is planned for Kuala Lumpur on Saturday, with protesters expected to be bussed in from all over the country. The opposition-organized demonstration is expected to draw between 10,000 to 15,000 people, according to the police, which will deploy about 2,000 officers to maintain order. Fitch Ratings estimates that the package will cost the government 2.3 billion ringgit. That can be accommodated within the 2025 budget deficit target of 3.8% of GDP, according to Kathleen Chen, an associate director in Fitch Ratings’ Sovereign team. Still, Chen warned that further delays or insufficient progress on subsidy reforms for the RON95 fuel could undermine consolidation efforts and jeopardize the government’s goal to reduce the deficit to 3% by 2028. Markets were little moved by the announcement, with the benchmark stock index up 0.3% and the ringgit barely changed. “The package shows that the authorities are turning on taps for counter-cyclical policy,” according to Lavanya Venkateswaran, analyst at Oversea-Chinese Banking Corp. She noted that the central bank had cut its interest rate by 25 basis points at its July 9 meeting, “and now some measure of fiscal policy is adding to the mix.” The spending plan comes as export-driven Malaysia also grapples with uncertainty on the trade front, with US President Donald Trump having threatened a 25% tariff on its goods. “All in all, the fiscal consolidation exercise has led to improved fiscal space which allows the government to prescribe such measures,” said Afzanizam Abdul Rashid, an economist at Bank Muamalat Malaysia. “The cash transfers would help to increase consumer spending which then could help to mitigate the impact from heightened external risk.” (ICE KUALA LUMPUR)

Fonte notizia: 28 luglio 2025, Kuala Lumpur