KUALA LUMPUR (Jan 20): JPMorgan Chase Bank was surprised that Prime Minister Datuk Seri Najib Razak made no mention of the government’s off-balance sheet fiscal liabilities in the revised budget announced today.

"There was no reference to the off-balance sheet fiscal liabilities which has been on the minds of investors, especially following concerns around 1Malaysia Development Bhd (1MDB)," said the bank’s economist Sin Beng Ong, in a note.

Besides, Ong said the other surprise was that the fiscal development expenditure will not be trimmed, and that the current investment programmes relating to Petroliam Nasional Bhd’s (Petronas) RAPID project will also not be delayed, despite the drop in energy prices which could impact oil and gas related cash flows.

“The implication here is that the [country’s] current account position will not improve much,” he explained.

Ong also took it negatively that the Najib administration had asked government-linked corporations to reduce foreign investments to curb outflows. “This goes against the grain of the past decade, which has seen large outflows due to regional opportunities,” he added.

Such measure could materially reduce outward direct investment (ODI) outflows, which were estimated at US$15 billion (4.4% of GDP) last year, said Ong, adding the consequence of this measure is that GLCs will see reduced future income flows from investments.