Malaysia says higher energy prices will support subsidy spending

[KUALA LUMPUR] Malaysia said on Wednesday (Jul 15) that higher global energy prices are boosting its petroleum revenues enough to cover part of its rising fuel subsidy costs, easing pressure on government finances.

The government has said it could spend up to RM40 billion (US$9.83 billion) on fuel subsidies this year, far above the RM15 billion initially set aside in its 2026 budget, amid higher energy prices linked to the Middle East conflict.

Every US$1 per barrel change in crude oil prices was estimated to have an impact of around RM300 million in federal petroleum revenue, not including dividends given to the government by state energy firm Petronas, Deputy Finance Minister Liew Chin Tong told parliament.

“This increase in revenue can help offset some of the additional pressure on fuel subsidy spending. The government also regularly monitors revenue collection to ensure it is able to meet federal operating expenditure needs,” he said.

If required, any review of its 2026 fiscal targets will be announced in the federal budget for next year, due to be presented in parliament in October, Liew added. REUTERS