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Malaysia to cut fuel subsidies ahead of 2015 budget presentation

[KUALA LUMPUR] Malaysia said on Wednesday it will implement a round of subsidy cuts on fuel this month, its second since September 2013, as it looks to strengthen public finances.

Prices for the widely used RON 95 grade will rise by 20 sen to 2.30 ringgit (S$0.90) per litre from Oct. 2 and diesel fuel will cost an extra 20 sen at 2.20 ringgit, the Domestic Trade, Cooperatives and Consumerism Ministry said in a statement.

The government will still need to spend over 21 billion ringgit this year on fuel and gas subsidies despite making these cuts, it said.

Subsidies will be reduced in stages to limit the impact on lower-income earners who will also receive cash aid as part of the 2015 budget to be tabled next week, the ministry said. "We understand that fuel price increases will affect the economy and the people. Therefore, we will continue to provide incentives to the lower income group to alleviate their burden," it said.

Prime Minister Najib Razak will table the annual budget on Oct. 10.