Targeted subsidies to avoid rising national debt - Economist

SHAH ALAM - The implementation of targeted subsidies can prevent the country from incurring higher debts in the future as the amount has now reached RM1.5 trillion.

Economist Dr Nungsari Ahmad Radhi said the large debt would continuously reduce the capital market and investors' confidence in the country's management.

He said it could cause the credit risk rating to be lowered and result in an economic crisis.

"The subsidy expenditure is already close to RM70 billion in the 2023 Budget and this amount is one-third of the government's tax revenue of which 90 per cent of the subsidy is for oil which is enjoyed by everyone.

"The amount of oil subsidy at the pump that is given in bulk is so large that the expenses have to be partially transferred to others," he said when contacted by Sinar recently.

He said that the targeted subsidies in the 2024 Budget were the government’s initiative to help the needy with the aim of adding other programmes for the people.

He added that the initiative was not only about saving government money but rather shifting the expenditure to the people in the target group.

"People who need subsidies will not be affected, even shifting spending to other government programmes will benefit more people in the target group.

"To help the people, part of the subsidy expenditure on products such as petrol will be diverted to expenditure on education, health, public housing and other assistance.

"The oil subsidy is still there but it is given to the target group, not to everyone," he said.