Source from (Business Times): http://www.btimes.com.my/Current_News/BTIMES/articles/rup1503/Article/
Published: May 16, 2013
Its governor Tan Sri Dr Zeti Akhtar Aziz said although the programme will contribute to price increase, it will not be significant.
"We have advised the government it has the breathing space to rationalise subsidies gradually.
"But if it indicates a timeline (for the implementation of the programme), I believe the economy can adjust to it through productivity gains, efficiency gains, automation and other means so that it does not result in high prices," she said at a media briefing on the first quarter GDP (gross domestic product) results yesterday.
The pump prices for petroleum and other related products have been unchanged since the pause in the implementation of the subsidy rationalisation programme proposed by the Performance Management Delivery Unit.
The previous reduction in subsidies were for petrol, diesel, liquefied petroleum gas and sugar.
The federal government's subsidy bill stands at RM42 billion.
Although the central bank has projected the Consumer Price Index (CPI) to range between two and three per cent in growth in 2013, it looks likely to be closer to lower end, added Zeti.
The CPI for 2012 was 1.6 per cent year-on-year.
Asked on the consequences of holding back the subsidy rationalisation plans, she said it will give rise to budgetary financial constraints.
"This will be a decision for the new Cabinet to make. Pemandu has made its recommendations on subsidy rationalisation and the central bank has already given its assessment that we have the potential to do the programme gradually so that it does not result in an economic dislocation.
"However if there is no subsidy rationalisation, it will impinge on the financial position of the government in terms of its budget."
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