Subsidies expected to hit RM80 billion in 2023, more than development expenditure - Zafrul

SHAH ALAM - Subsidies are expected to hit RM80 billion in 2023 which is more than the country's development expenditure in 2022, finance minister Datuk Seri Tengku Zafrul Aziz said.

He said the total development expenditure in 2022 was at RM76 billion.

"That's why it is important for the government to design more targeted subsidy which benefits people.

"A lot can be saved with targeted subsidies. The savings can be used for development plans to generate economy in the future, such as for education, health and public transport.

"Isn't this a better move?," he said in an exclusive interview with Sinar Harian.

He was asked about the impact of targeted subsidies.

Zafrul also said there are many factors that need to be considered before targeted subsidies are implemented. "A current fuel subsidy is not sustainable in the long term as there are significant leakage.

"RON95 is now sold at RM2.05 per liter and diesel at a price of RM2.15 per liter. For the month of June, the average price without subsidy is RM4.70 per liter for RON95 and RM5.40 per liter for diesel.

"This difference creates a large incentive for smuggling activities," he said.

Commenting further, Zafrul said a test for targetted gasoline subsidies has officially started and the government needs up to three to six months before implementing the subsidies.

"The initial testing of targeted fuel subsidies will include urban and rural areas," he said..

It will also be implemented in phases to curb sudden inflation or affect economic growth.