PUTRAJAYA: Rising global oil prices amid the conflict in the Middle East are set to significantly impact government finances, with petrol subsidies alone estimated to jump to about RM2bil.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the subsidy for diesel has also increased by about RM1.2bil.
This brings the total fuel subsidy for RON95 and diesel to RM3.2bil, an overall increase of RM2.5bil compared with the RM700mil before the conflict.
"We are not saying that we are not affected. We are affected because the prices of goods are influenced by oil prices, which are determined by market forces," he told a press conference here after a special Cabinet meeting on Friday (March 13).
"However, the Madani government is taking an approach to ensure that the people continue to receive support, and that we can maintain assistance through the Budi95 programme.
"This provides some relief to the rakyat at this time as the government continues to extend support," he said.
Amir Hamzah added that the burden of higher subsidies is manageable thanks to the fiscal reforms and consolidation measures implemented over the past three years under the government.
"We have the fiscal space to do this. But it is important to remember that the conflict may last for an uncertain period.
"As such, it is crucial to consider forward-looking measures that can reduce the current burden while ensuring that we use this space to implement sound reforms, what we call a no-regret move," he said.
He reiterated that Malaysia’s petrol and diesel supplies remain sufficient, unlike in some other countries, as PETRONAS and domestic oil companies work to maintain supply despite the Middle East conflict affecting key exports such as urea, sulphur and helium.
"Our supply remains stable and is supported by strong domestic gas production, refinery capacity, oil and gas output and sufficient storage facilities," he added.
