The government will have to fork out RM35 billion in fuel subsidies if global oil prices hover at US$100 per barrel this year, a minister said today.

"The RM35 billion was calculated at around US$100. If (oil) is going to remain at 100 dollars for the full year of 2008, that will be the figure," Second Finance Minister Nor Mohamed Yakcop said.

"But if the average is lower, it (subsidy) will be slightly lower," he was quoted saying by the official Bernama news agency.

The minister's response to whether domestic petrol prices will rise if the crude oil price stays at 100 dollars throughout the year was: "I really don't know."

Analysts are expecting a fuel price hike this year but the timing of the increases is complicated by elections which were expected to be held in early 2007.

Malaysia imposed its highest-ever fuel price rises in February 2006, citing the spiralling cost of crude oil. The move was condemned by political and civil groups, arguing it was unnecessary as the country is a net exporter of oil.

Nor Mohamed added that Malaysia's well diversified economy will enable it to weather challenges such as the high oil prices and the US subprime mortgage crisis.

"Thus, the government is confident that the economy would grow by six percent or even higher in 2007 and between 6.0 and 6.5 percent in 2008," he said, referring to official forecasts.