The 20 sen per litre RON95 and diesel fuel hike is shocking to Malaysians because the international oil price is down to the lowest in nearly three years.
What then is the real reason for the Barisan Nasional (BN) federal government to make such a desperate unpopular decision to further burden the urban and rural poor’s socio-economic woes?
From a macro-economic perspective, the desperado BN is struggling to keep its administration going because it is managing the country with an empty federal coffer amid a federal debt of more than RM800 billion.
With such a huge debt, not only is the federal government managing the country on borrowings, it is also finding it more and more difficult to secure funds.
The debt-ridden administration is affecting the confidence of lenders, thus the desperate need to cut subsidies in the country, especially fuel.
Another round of fuel hike is expected this year-end, followed by the April implementation of the inflationary Goods and Services Tax (GST).
Today’s 20-sen fuel hike will no doubt trigger a round of inflationary domino-effects, raising the prices of almost every essentials due to costlier transport.
It won’t be surprising if coffee shops start raising the cuppa by 20 sen. Car park operators have already put up notices announcing an increase in parking rates.
Reuters reported from Tokyo today that the damage from an April 2014 tax hike by Prime Minister Shinzo Abe’s government has been worse than expected, and worse than an increase in 1997, which began a tailspin that ended the career of the then prime minister.
