KUALA LUMPUR: Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah was tight-lipped on whether the government will reduce sugar subsidy for the second time in the 2014 Budget.
He said the government is monitoring the situation.
“Everything is in place but we will do the finetuning two weeks before the Budget announcement,” he said after officiating at the Khazanah Megatrends Forum 2013, here, yesterday.
Subsidies are expected to cost the government some RM37.6 billion this year, accounting for 18.6 per cent of its operating expenditure.
Last year, subsidies accounted for 21 per cent of the government’s operating budget.
Market talk is that the government is poised to cut sugar subsidy for the second year running, a move that should help in its efforts to balance the budget.
Last year’s Budget saw sugar subsidies cut by 20 sen per kilogramme, which brought the retail price of the commodity to RM2.5/kg.
The recent reduction in fuel subsidy, which saw the prices of RON95 petrol and diesel rise by 20 sen each, have seen many speculating that sugar subsidy may be next in line for a cut.
Husni said the government is confident of achieving its deficit target of four per cent this year and 3.5 per cent next year due to two factors, namely a significant revenue growth, mainly from
higher tax collection, and subsidy rationalisation.
The government, he added, is always looking at ways to cut its spending and focusing on “productive expenditure”, which has led to the introduction of outcome-based budgeting this year for three ministries, namely finance, health and international trade and industry.
“Hopefully by 2015, all ministries will implement this outcome-based Budget,” he said.