Kuala Lumpur  - Malaysian Prime Minister Abdullah Ahmad Badawi on Friday announced his government would increase development spending in 2009 as part of initiatives to help the public deal with soaring inflation.

Abdullah, who is also finance minister, said a budget of 207.9 billion ringgit (63 billion dollars) would be allocated for next year, out of which 53.7 billion ringgit would be used for development expenditure, an increase of 11.8 per cent from 46.3 billion ringgit allocated for this year.

Abdullah said the budget, which was announced in Parliament, would focus on developing quality human capital and strengthening the nation's economic resilience.

"Today, as we face a global environment of higher prices and slower economic growth, I am confident, if we remain united, we shall overcome this challenge as well," he said.

Development spending includes poverty alleviation programs, efforts to upgrade roads and transport, educational skills training, health care and housing projects.

Abdullah said the government would also raise the eligibility criteria for welfare assistance. Currently, only those with a monthly household income of 400 ringgit or less qualify to receive aid. The figure would be raised to 720 ringgit.

"The government will implement a broad range of measures to reduce the impact of the higher cost of living, particularly among the lower income group and the vulnerable," Abdullah said in his speech.

He also announced 35 billion ringgit would be spent from 2009 to 2014 to improve the efficiency of the country's often-criticised public transportation system.

Malaysia is currently facing an inflation rate of 8.5 per cent, the highest in 27 years, after the government hiked gasoline prices by 41 per cent in June to reduce a massive subsidy bill.

Abdullah said last week that gasoline prices would be dropped by 5.6 per cent and that further cuts were likely to be announced soon.

In a report released ahead of the budget announcement, the Finance Ministry said Malaysia's economy is expected to expand by 5.7 per cent this year and 5.4 per cent in 2009, down from 6.3 per cent in 2007. (dpa)