Subsidy cuts frozen, says PEMANDU

(TMI) – Putrajaya has halted a plan to slash subsidies just a year after unveiling it due to rising cost of living in the country, according to the Performance Management and Delivery Unit (PEMANDU).


The Najib administration had rolled out the subsidy rationalisation programme, which saw the first round of subsidy cuts in July 2010, to help reduce the fiscal deficit from a two-decade high of over seven per cent in 2009 to near-balance by 2020.

File photo of sugar on sale at a supermarket in Bosnia. Putrajaya said in January it was spending an additional RM200 million this year to keep sugar at RM2.30 per kg. — Reuters pic

But the unit in the Prime Minister’s Office told The Malaysian Insider that the programme was shelved after inflation breached a 27-month high of 3.5 per cent last June.

“We have put it on hold because the government has changed its focus to cost of living,” said Alex Iskandar Liew, its communications director for the Government Transformation Programme (GTP).

“The ministries and agencies have progressively implemented the programme as per the earlier recommendation, i.e. every six months.

“However, due to rising commodity prices affecting the global community in 2011, we had to take stock to review the programme due to the cost of living issues,” he wrote in an email sent to The Malaysian Insider.

Liew said that “since the April 2010 announcement and the follow-up implementation on subsidy rationalisation up till mid-2011, the responsibilities and latest data points are now residing in the respective government ministries and agencies.”

Datuk Seri Najib Razak had said he would allow funds to be channelled to improving services such as education and healthcare.

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