Thursday, June 14, 2012

Putrajaya asks for RM14b more to spend

Putrajaya asks for RM14b more to spend

UPDATED @ 11:30:53 AM 14-06-2012
June 14, 2012
Malaysian Insider
KUALA LUMPUR, June 14 — The federal government tabled a supplementary supply Bill today, asking for RM13.8 billion more to spend this year, fuelling fears the Najib administration will not be able to rein in the deficit and breach the statutory debt ceiling.

The Bill, tabled this morning by the Finance Ministry, allocates RM360 million to the Election Commission (EC), RM113 million to the Prime Minister’s Department, RM446 million to the Works Ministry and a whopping RM11.2 billion for “treasury general services” ahead of federal polls that must be called within the year.

The Malaysian Insider reported that Barisan Nasional (BN) MPs will each receive RM1.5 million to plough into their constituencies and that the ruling coalition is looking towards having a general election after Budget 2013 is tabled by Datuk Seri Najib Razak (picture) on September 28.

The prime minister has also admitted recently that the government is considering a repeat of the RM500 dished out early this year to low-income families under the Bantuan Rakyat 1 Malaysia (BR1M) that cost RM2.6 billion.
“Addition of RM360 million is required to pay for preparations and running the 13th General Election,” the explanatory note said of the amount requested for the EC.

It also outlined RM7.5 billion for “liquefied petroleum gas, diesel and petrol subsidies and cash aid” as well as RM30 million for a National Branding Unit under the Prime Minister’s Department.

Najib, who is also finance minister, said late last month the government will ensure that Malaysia’s debt will not exceed the statutory ceiling under the Loan (Local) Act and Government Funding Act due to its prudent management of the nation’s finances.

He said the national debt stood at 53.5 per cent of the GDP, which stood at RM881 billion for 2011 after a recent revision, leaving Malaysia just RM13 billion shy of the 55 per cent debt limit.

The Najib administration has pledged to cut the fiscal deficit, which dropped to 4.8 per cent last year from a 22-year high of over seven per cent in 2009.

But Malaysia’s slowing economy, which recorded a third consecutive quarterly dip in growth to 4.7 per cent in the first three months of the year, has raised questions of whether the federal government can keep spending in check.

Analysts have warned Malaysia to brace for a significant slowdown here due to rising linkages with top trade partners including China, the world’s second-largest market which economists say is headed for a sixth consecutive quarterly drop in growth with worse to come.

A Greek exit from the euro zone, which is growing threat, would cause a second recession in as little as four years in Malaysia as the knock-on damage to Europe poses a threat to the global economy, Bloomberg reported analysts and economists as saying recently.

The World Bank also urged Malaysia last week to expedite reforms such as subsidy cuts and broadening the tax base, key initiatives that have stalled ahead of an impending federal election, if it wants to achieve Putrajaya’s target of being a high-income economy by 2020.

“If BN continues to spend according to the current Budget, this will have a severe impact on the deficit level and can breach the 55 per cent statutory limit of debt-to-GDP ratio,” Opposition Leader Datuk Seri Anwar Ibrahim said recently.

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