Malaysia plans 13% salary hike for civil servants from Dec amid rising prices

APEC Summit in San Francisco

KUALA LUMPUR (Reuters) - Malaysia will boost salaries for civil servants by more than 13% from December, Prime Minister Anwar Ibrahim said on Wednesday, amid rising prices, a weak ringgit currency, and plans to reform subsidies.

Anwar had earlier vowed subsidy cuts and higher taxes this year, while re-directing financial aid to the needy. Analysts have flagged risks of inflation and greater fuel costs from the planned cuts, amid falling exports and moderating growth.

The salary increase will involve an allocation of 10 billion ringgit ($2.10 billion), Anwar told an event to mark Labour Day.

The government was finalising plans to ensure civil servants a minimum monthly income of more than 2,000 ringgit, he added.

Malaysia's government and central bank expect full-year economic growth of 4% to 5% this year, up from 3.7% in 2023, which was a sharp drop from a 22-year high of 8.7% in 2022.

The ringgit has weakened 3.9% against the dollar this year, having fallen to a 26-year-old low in February.

The government and central bank have attributed its weak performance largely to external factors, saying they expect it to strengthen this year.

($1=4.7700 ringgit)

(Reporting by Danial Azhar; Editing by Shri Navaratnam and Clarence Fernandez)