KUALA LUMPUR: Malaysia's petroleum subsidies bill could more than double to 28 billion ringgit (US$6.7 billion) this year if crude oil prices remain at elevated levels following Russia's invasion of Ukraine, the finance minister said on Thursday.
Finance Minister Tengku Zafrul Aziz told parliament the government has already started boosting subsidies, spending 2 billion ringgit on petrol, diesel, and liquefied petroleum gas subsidies in January - a tenfold increase from the same month last year.
Malaysia spent 11 billion ringgit in petroleum subsidies last year. Its monthly subsidies bill could balloon to 2.5 billion ringgit if the war in Ukraine, which Russia calls a "special operation", keeps crude oil prices above $100 a barrel as global supplies are squeezed, Tengku Zafrul said.
He added the government was reviewing its subsidy mechanisms to ensure the handouts reach targeted vulnerable groups, as prices of other subsidised goods such as cooking oil are also set to rise.
"The government cannot borrow to finance operating expenditures such as subsidy costs," he said.
"So the increase in subsidies needs to be offset by additional revenue and expense savings."