Malaysia's new government on Wednesday said it would reduce a goods and services tax to zero from June 1, effectively abolishing it, a move that is likely to spur spending in the Southeast Asian nation but put pressure on its fiscal position.
Ousted leader Najib Razak had introduced the tax in 2015 amid lower oil prices.
GST would be zero-rated from June 1, the Ministry of Finance said in a statement on Wednesday.
Ratings agency Moody's said this week that the removal of GST would be credit negative for Malaysia as it would cut off a significant revenue source for the government.
Najib's government had planned to collect 43.8 billion ringgit ($11.05 billion) in 2018 in GST, about 18 percent of total revenue.
Zeti, a former long-serving central bank governor, said the government will re-prioritise projects, increase efficiency and reduce wastage in the public sector.