KUALA LUMPUR: The Ringgit’s appreciation should give some breathing space to the government’s subsidy reduction exercise, says MIDF Research.
“We think such a policy should still be carried out but at a more moderate pace,” it said, adding that this would help ease the pressure on the government in footing the estimated RM73 billion subsidy bill for essential items.
It also expected higher crude oil prices to result in fuel subsidies accelerating to RM14 billion if pump prices are not raised.
“We can expect a savings in external debt which we project at US$74 billion in 2011, from US$72.6 billion in 2010, with the US dollar representing 65.9 per cent of the currency’s composition,” MIDF Research Chief Economist Anthony Dass said in a note yesterday. As for businesses, he said Malaysians can also look forward to pay less for imported goods with the strengthening ringgit.
“This would help contribute to innovation and automation of industries and encourage direct investment in high impact sectors like oil and gas,” he said. — Bernama