The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
The governance pillar of the Environmental, Social, and Governance (ESG) framework, often overshadowed by its environmental and social counterparts, is receiving greater emphasis under Malaysia’s Budget 2025. These reforms are aimed at ensuring transparency, accountability, and socio-economic equity, creating a foundation for a more resilient and inclusive Malaysia.
Key Highlights of Governance Reforms
1. Fiscal Responsibility and Subsidy Reforms
- The government is narrowing the fiscal deficit to 3.8% of GDP in 2025 (from 4.3% in 2024).
- Subsidy Rationalisation:
- Phasing out blanket subsidies in favor of targeted assistance to benefit vulnerable groups.
- Savings will increase Sumbangan Tunai Rahmah allocation from RM8 billion to RM10 billion, supporting 9 million recipients.
- Revenue Boost:
- Sales and Service Tax (SST) expansion.
- 2% dividend tax on income exceeding RM100,000 annually.
2. Public-Private Partnerships (PPPs)
- The Public-Private Partnership Master Plan (PIKAS) aims to:
- Attract RM78 billion in private investment.
- Create 900,000 job opportunities by 2030.
- PPPs will deliver critical infrastructure while alleviating fiscal pressures.
3. Enhancing Governance and Efficiency
- Increased funding for Parliamentary oversight bodies, including the Public Accounts Committee (PAC) and Select Committees.
- Accountability reforms for government-linked companies (GLCs) and statutory bodies to ensure better performance and alignment with mandates.
- Pasukan Star Task Force: Cutting red tape to improve public service delivery.
- Digitalisation: Modernising administrative processes to enhance operational efficiency.
4. Legal and Cybersecurity Reforms
- Updates to the legal framework to:
- Strengthen the rule of law.
- Boost investor confidence.
- Increased funding for cybersecurity to protect the nation’s digital infrastructure against growing cyber threats.
Socio-Economic Impact
These reforms balance fiscal responsibility with socio-economic development, addressing structural inefficiencies and fostering a more sustainable and inclusive Malaysia. By modernising governance and focusing on equity, the government aims to drive long-term economic growth while ensuring fairness for all citizens.
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