Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly, on October 26 - November 1, 2015.

 

OPPOSITION Member of Parliament Tony Pua lambasted Budget 2016, presented by Prime Minister Datuk Seri Najib Razak, saying that it will increase the burden of Malaysians as debt rises faster than economic growth.

In a statement last Friday, the Petaling Jaya Utara MP describes the budget as “long on grandiloquence and short on substance”.

“While the prime minister praised his government for its far-sightedness in introducing the Goods and Services Tax (GST), as the income from the new tax will make up for the loss of revenue from the oil and gas sector, the reality is Malaysians, in particular the middle and lower income groups, are now burdened with coughing up GST of RM39 billion relative to the loss of RM17.5 billion from the Petroleum Income Tax,” Pua says.

He also points out that the Najib administration has failed to increase its prudence on expenditure.

Pua cites the example of the budgeted expenditure for “supplies and services”, which has been maintained at RM36.3 billion for 2016, when it was only RM20.8 billion in 2010. “Why has this provision increased by 75.4% in just five to six years?” he asks.

He also notes that the consequence of the failure to be prudent in spending can be reflected in the increase in federal government debt from RM582.8 billion in 2014 to an expected RM627.5 billion by end-2015.

“The 7.7% increase in federal government debt also significantly outpaced the growth of Malaysia’s GDP of only 4% to 5% per annum.”

Pua says Najib has embellished the budget with announcements of several mega projects, including RM28 billion for the proposed MRT2 line and the Pan Borneo Highway.

“Besides the fact that these projects were just recycled announcements from last year’s Budget 2015, the finance minister forgot to mention that they are funded by off-budget financing which isn’t reflected in the official budget.”

Pua notes that these off-budget measures are not taken into consideration in the targeted budget deficit of 3.1% in 2016.

“Based on the federal government’s financial statements for 2014, the contingent liability arising from these government guarantees will increase from RM157.5 billion in 2014 to RM172 billion in 2015,” he says.

“The resulting 9.2% increase is at an even faster pace than the rising federal government debt. This shows that the government is shifting an even larger percentage of expenditure ‘off budget’to hide its inability to keep a lid on its expenditure.”

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