Malaysia's central bank has urged for an acceleration of structural reforms to bolster long-term sustainable economic resilience and provide support for the country's currency, the Ringgit.

Alongside its annual report, Bank Negara Malaysia (BNM) said the upbeat economic conditions forecast for this year, including moderate inflation and a trade activity rally, will allow space for the government to make changes such as subsidy rationalisation.

The government is planning to move away from blanket subsidies to a targeted system primarily benefiting low-income groups. However, it has not yet determined the timeline for implementing these measures, which could result in an increase in fuel costs, Reuters reports.

""With the positive macroeconomic prospects, this presents a window of opportunity to undertake... key structural reforms to ensure growth in the Malaysian economy becomes stronger and more sustained,"" central bank governor Abdul Rasheed Ghaffour said following the release of the report on Wednesday.

That said, the governor added that a shift to targeted subsidies would require meticulous calibration and evaluation to mitigate its effects on economic growth and inflation. He noted that previous subsidy policies had not necessitated any monetary policy intervention from the central bank.

Furthermore, the report added that BNM has held its growth forecast for this year at between 4% and 5%. Exports are predicted to rise 5% following last year'syear's 8% contraction.

New taxes and utility tariff modifications designed to boost government revenue were forecast to have only a marginal effect on inflation, BNM added.

Headline inflation is projected at between 2% to 3.5% in 2024, compared to 2.5% in 2023. However, there are still upside risks stemming from prices hikes from subsidy and price control adjustments as well as elevated input costs from the weaker Ringgit.

The currency has edged up since plunging to a 26-year low in February, but remains down around 3.2% against the Dollar so far this year.