By Pauline Ng. Published by The Business Times Singapore on 24 September 2013.
THE Malaysian government's commitment to budgetary reforms and the consolidation of its fiscal deficit was thrown into doubt yesterday when it sought a further RM14.12 billion (S$5.6 billion) for its operating expenses. Economists say the large amount, coming a month before the tabling of the 2014 Budget, could undermine the government's credibility and lead to a further weakening of the ringgit if does not meet consolidation targets and is punished by international investors.
In Parliament yesterday, Deputy Finance Minister Ahmad Maslan tabled the Supplementary Supply Bill 2013 seeking the extra funds, the bulk or nearly RM12 billion sought for Treasury services. Given that Mr Ahmad had in July already asked for RM12.17 billion under the same Bill, the latest request is sure to raise concerns as to whether Malaysia can pare its fiscal deficit to 4 per cent of gross domestic product (GDP) from 4.5 per cent last year.
The government should not hide behind fictitious economy projections but rather come to terms with reality; as it is unnecessary to have Supplementary Bill annually, says Lembah Pantai MP Nurul Izzah Anwar. Pakatan Rakyat views with great concern the first Supplementary Bill on operating expenditure for 2013 worth RM15 billion, comprising of RM14.13 billion for ‘perbelanjaan bekal’ and RM 888.46 for ‘perbelanjaan tanggungan’ which was tabled in parliament yesterday.
According to Nurul, the supplementary budget will adversely affect the nation’s public finances in general and the pace of fiscal consolidation process in the immediate to medium term. The PKR leader also forecast that if no changes happen in revenue, development expenditure, loan recovery and the GDP, the additional operating expenditure will cause the ratio of budget deficit against GDP for 2013 to jump to 5.5% Nurul stressed that 5.5% ratio will be above the 4% projection target tabled in Budget 2013 on 28 September 2012...
“The BN government has failed to achieve their own deficit to GDP targets whilst asking Malaysians to tighten their purses for the sake of a more sustainable future,” says Nurul. She cited the consequences faced in 2012 where by the government failed to achieve the 4.5% target for deficit to GDP ratio.
“It ballooned to 4.9% after taking into account all supplementary bills amounting to RM 28.5 billion,” added Nurul
Nurul also added that the government failed to display meaningful progress towards achieving a self imposed commitments to bring down the budget deficit-to-GDP ratio to 3% by 2015 and maintain a public debt ceiling below 55% at all times.
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The Permata Negara project, under the patronage of the prime minister's wife, had received allocations of RM150 million in 2013, RM111 million in 2012 and RM100 million in 2011.
Manivanan described the manner in which the allocation was spent as "quite peculiar". "Out of the RM 150 million, RM 20 million was returned back to the government, RM 77 million was given to Kemas by Permata to upgrade 313 pre-schools throughout the country," he said.
He said RM 16 million was channelled to the Terengganu Family Development Foundation and another RM9 million was given to the Sarawak state government to manage the state's second Permata programme.
"So Permata is the body that provides government funding?" he asked. "What is it's hallmark achievement in education?"
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