Tuesday, April 06, 2010

Deficit to swell to 7.9pc, says Kit Siang

DAP’s Lim Kit Siang has demanded an explanation for the RM12 billion in supplementary expenditure which he says will swell the government’s budget deficit to 7.9 per cent for 2009 from the official estimate of 7.4 per cent.

He also said that the other Bill — another RM12 billion in supplementary expenditure, this one for 2010 — will cause the government to miss its target of lowering the budget deficit to 5.6 per cent of GDP this year.

“With these two sets of supplementary estimates, Malaysia’s budgeting has again gone awry with the budget deficit in 2009 shooting to as high as 7.9 per cent of GDP in 2009 and over 7% in 2010,” he said in Parliament today while debating the supplementary estimates.

“A full explanation for this fiscal indiscipline and even irresponsibility should be given, as this is proof of imprudent control of public expenditure amidst inefficient utilisation of the nation’s financial resources.”

A larger than expected budget deficit may derail the Najib administration’s efforts to introduce fiscal reforms.

The budget deficit was earlier estimated to have hit a record high of 7.4 per cent last year and reach 5.6 per cent this year.

The Fitch ratings agency had cut Malaysia’s local currency ratings to “A” from “A-Plus” in June last year due to concerns over the country’s growing budget deficit and said that Malaysia needed structural reforms to improve its long-term growth prospects and strengthen its credit profile.

There are two sets of supplementary estimates being presented in parliament — the second supplementary estimates for 2009 totalling RM11.36 billion, of which RM8.98 billion is for operating expenditure and RM2.39 billion for development expenditure, and the first supplementary estimates for 2010 totalling RM12 billion for both operating and development expenditure.

In his speech, Lim took aim at RM32 million allocated in the 2009 Development Supplementary Estimates for the purchase of aircrafts for the police.

“Apart from allowing the Inspector-General of Police and top police officers to work in style (it) makes no contribution whatsoever in the campaign to fight crime to make the country safe to work and play by Malaysians, tourist and investors,” said Lim. “The RM34 million would be better spent in purchasing say some 68,000 bicycles or 6,800 Honda cubs for all the police stations in the country to increase police visibility with frequent police beats, which is the best and most effective way to combat crime to keep the people in the streets, public places and private homes free from crime and the fear of crime!”

According to figures provided by DAP, if the supplementary bills are passed, the total expenditure for 2009 will hit RM229.25 billion against revenue of RM176.2 billion leading to a shortfall of RM53.05 billion, or 7.87 per cent of GDP.

The total spend for 2010 will be 203.57 billion against revenue of RM148.8 billion, or a deficit of 7.12 per cent of GDP.

courtesy of Malaysian Insider

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