Malaysian government subsidies for gasoline, food and other essential goods are expected to hit 50 billion ringgit ($15.6 billion) this year as global prices soar, Prime Minister Abdullah Ahmad Badawi said Sunday. This exceeds last year's subsidy bill of 43 billion ringgit ($13.4 billion) and is higher than the government's annual 40-billion ringgit ($12.5 billion) allocation for major development and infrastructure projects. “We are facing a situation we have not faced before ... it's a new crisis related to crude oil prices. Total subsidies are up to 50 billion ringgit,” Abdullah said at a meeting of his ruling party. Of that, 45 billion ringgit ($14 billion) goes to fuel and gas, with the rest for food and other items such as education, he said. Fuel and food costs in Malaysia are among the lowest in Asia due to heavy subsidies, which are posing a burden to the government's finances as it grapples with a slowing economy and inflationary pressure. The central bank recently cut its 2008 economic growth forecast to between 5 percent and 6 percent, down from between 6 percent and 6.5 percent previously, citing global uncertainty due to the US credit crisis. The economy expanded 6.3 percent in 2007. Concerns over the rising cost of living contributed to the poor performance of Abdullah's ruling coalition in March elections, when it lost its two-thirds majority in Parliament. Domestic Trade and Consumer Affairs Minister Shahrir Samad was quoted by Sunday's Berita Minggu newspaper as saying the government plans to charge foreigners market prices for gasoline to curb its subsidy bill.
