Fiscal deficit target requires fuel subsidy removal or reduction with 4% GST- RHB IB

KUALA LUMPUR: A complete removal of fuel subsidy or, alternatively, a combination of at least a goods and services tax (GST) rate of four per cent and 90 per cent reduction in fuel subsidy is necessary to achieve a fiscal deficit target of three per cent of gross domestic product (GDP), RHB Investment Bank Bhd said.

In a research note today, the investment bank said the adoption of two-pronged fiscal consolidation strategy, namely diversification of revenue base and rationalisation of operating expenditure (OE), is necessary to ideally balance the budget further down the road.