PUTRAJAYA: The government’s fuel subsidy rationalisation has raised investor confidence in the the country’s economic growth, said Deputy Finance Minister Datuk Ahmad Maslan.
He said the ringgit has strengthened in a period of three weeks to RM3.259 against the US dollar in the wake of the subsidy reduction announcement.
“This is a positive message from investors who have seen the government’s commitment in handling the nation’s fiscal deficit,” he told reporters after handing over Hari Raya contributions to support staff II, the disabled, single mothers and orphans at the Finance Complex yesterday.
He said the subsidy reduction was not only to ensure government subsidies get to the deserving but would make a positive impact in other areas.
Alliance Research in a statement said the ringgit is expected to appreciate to 3.22 to the US dollar at the end of this year from around 3.30 on the back of improving economic fundamentals despite an expected short-term volatility.
The ringgit slid to its lowest level in 27 months to RM3.33 to a US dollar on Aug 27 before rebounding to close at 3.2685 to the dollar on Wednesday.
Ahmad said households earning below RM3,000 a month use only 30 per cent of RON95 petrol, spending an average of RM132 a month on the fuel.
“Those with monthly incomes above RM5,000 on average buy RM375 a month of RON95, meaning this group benefit more from the susbsidy,” he said.
He said the fuel subsidy reduction was made by the government to ensure the nation’s subsidies are more equitably distributed to lower-income groups. — Bernama