KUALA LUMPUR (Oct 18): The government expects the budget deficit for 2019 to rise to 3% due to the large amount of debt inherited from the previous government which needs to be paid, said Prime Minister Tun Dr Mahathir.
Speaking to reporters after tabling the Mid-term Review of the 11th Malaysia Plan in Parliament, Dr Mahathir said if nothing is done about the debt, the country will get a more negative rating from credit rating agencies.
“The market will react one way or another. What we are trying to do is to improve the performance of Malaysia economically, politically and socially,” he said when asked if the higher budget deficit will affect the market.
“What we inherited from the previous government is a lot of loans. They borrowed more than RM1 trillion. Never in the history of Malaysia has a government ever borrowed so much money.
“Now we inherited these loans, so whether we like it or not, we have to pay. That is the constraint that we face, (but still) we will be able to do some developments from whatever income that we derive,” he added.
The government is also expecting a lower gross domestic product (GDP) growth of 4.5%-4.9% for 2019. Commenting on this, Dr Mahathir said the figures in the past were not a correct estimation, as they did not take into consideration “off-budget budgeting”.
“Whatever they (previous government) didn’t like, they put it in off-budget. They borrowed RM42 billion off-budget. That is now inherited by the government, because it was a government company and the government guaranteed the said company,” he said.
The government will hedge crude oil price at US$70 per barrel in Budget 2019, Dr Mahathir added.
Dr Mahathir had in his speech earlier indicated that the government will be prudent in its spending.
When asked as to how small the next budget will be, he said most of the revenue earned will be utilised to pay national debts.
“We cannot reduce the operational budget; that has to go on. The only way we can save money is through reducing the development budget. So, I don’t know exactly (how small is the budget), but you can ask the finance minister,” he added.