PETALING JAYA: The Government still needs to spend over RM21bil to subsidise RON95, diesel and liquid petroleum gas (LPG) this year despite reducing the subsidy.

Effective last night, the prices of RON95 and diesel had gone up by 20 sen per litre – RON95 is now RM2.30 a litre while diesel is at RM2.20.

In a statement, the Domestic Trade and Consumerism Ministry said the market price for RON95 was at RM2.58 per litre and diesel at RM2.52.

“Although the Government has reduced the subsidy, it is estimated that it still needs to spend over RM21bil to subsidise RON95, diesel and liquid petroleum gas for 2014,” it said.

The price adjustment, said the ministry, was in line with the Government’s subsidy rationalisation programme.

“The giving of subsidy needs to be more targeted and not in bulk, which non-Malaysians, including foreign tourists, also enjoy.

“These steps will be able to produce appropriate savings and can be used for more productive expenses such as education development and training, health, a wider and more efficient public transportation system as well as national security,” it said.

The move, said the ministry, was also to ensure that the federal government’s financial standing remain strong and on the right track to reduce fiscal deficit in stages – from 3.9% of the Gross Domestic Product in 2013 to 3.5% this year, 3.0% in 2015 and a balanced budget in 2020.

The Government, said the ministry, would ensure that the subsidy rationalisation be implemented carefully and in stages to minimise impact on the economy and would not pose a burden to the public, especially those from the low and middle income groups.

“Therefore, the Government will continue to provide assistance and incentives to ease the burden,” it said, adding that one of these was to increase the rate of the 1Malaysia People’s Aid, to be announced in Budget 2015 as well as school aid, housing subsidy and tax incentives.

-thestar