PUTRAJAYA, Malaysia Sept 2 Malaysia will cut
fuel subsidies to shore up public finances and hand out more to
poor families, Prime Minister Najib Razak said on Monday, in a
move to boost confidence in his economic leadership as the
country comes under pressure from outflows.
The new measures are aimed at reducing Malaysia's fiscal
shortfall, among the largest in Asia, and to offset weaknesses
in the current account. Poor fundamentals have been blamed for
financial market routs in India and Indonesia.
Najib said pump prices for the widely used RON 95 grade will
rise by 20 Malaysian sen to 2.10 ringgit ($0.64) per litre, the
first time since December 2010.
The subsidy cut, effective from Sept 3, will save the
government an estimated 1.1 billion ringgit this year and
another 3.3 billion ringgit in 2014, Najib, also the country's
finance minister, told a news conference.
To soften the impact of the petrol price hike, Najib said
the government will announce higher cash payouts to low income
families when it tables the budget on Oct 25.
Weakened by a poor election performance in May, Najib will
be looking to improve perceptions of his economic stewardship as
he faces a possible leadership challenge in internal party polls
in October. Growing worries over political risk in Malaysia come
at a time when Asia's emerging economies are facing turbulence
as investors pull money out of stock, bonds and currencies.
($1 = 3.2847 Malaysian ringgit)
(Reporting By Siva Sithraputhran; Editing by Jacqueline Wong)