Friday, October 23, 2009

Budget Preview: CNA Report

Below is my comments from the Channel News Asia preview report on the Budget announcement for later today. Called me an 'economist' instead of a 'politician'! Hah! ;-)

Tony Pua, an economist, said: "One of the problems Najib faces now is he's in a scenario where he's between a hot rock and a hard place. Najib is stuck because he can't find the money. He knows he needs to spend. He needs to boost and continue to sustain the deficit.

"But because in the previous years, there's no surplus, no savings, he's not able to find the money, especially when oil prices halved from the peak."

Government sources said the 2010 deficit may be reduced to 5.5 per cent of the GDP, so as not to affect Malaysia's sovereign ratings. There are hints the government could roll back billions of dollars spent in subsidies and cut back on expenditure by 15 per cent.

Mr Pua continued: "More importantly, where the money is spent needs to be measured carefully. Otherwise, you can spend all the money, but it's not going to productive sectors. So you end up burning all the cash.

"We believe that he needs to bite the bullet now, put in measures to strengthen the government institutions and the financial management of the economy."

There may be disappointment for the over one million strong civil servants hoping for bonuses.

But Friday's budget will still be keenly watched, as the Prime Minister outlines how he intends to steer the economy in the medium to long term.
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