Debt cut on track despite extra RM14b bill

The government claims that per capita income had increased, which means there is more revenue in the coffer.

KUALA LUMPUR: The government insists that it is on track to rein in public debt despite a bleak growth forecast which will likely force it to fork out more money.

Minister in the Prime Minister Department Idris Jala claimed per capita income had risen, which means there is more government revenue.

He said this would help offset the growing deficit amid concerns that the government’s demand for an additional RM13.8 billion would add to the growing debt.

“The good news is that gross national income per capita has grown. Last year, it was RM30,700 (US$9,700), compared with US$6,700 in 2009. We are still on track for a 4.7% deficit,” he told reporters here.

Jala is the head of Pemandu, the government’s efficiency unit, which made slashing the national debt a key target.

The government tabled a supplementary supply bill yesterday asking for an additional RM13.8 billion to spend this year.

The move drew criticism from opposition lawmakers and fuelled fears that the government will not be able to meet its deficit target and breach the statutory debt ceiling.

The bill allocates RM360 million to the Election Commission, RM113 million to the Prime Minister’s Department, RM446 million for the Works Ministry and a whopping RM11.2 billion for “treasury general services”, just ahead of national polls that must be called within the year.

Prime Minister Najib Tun Razak said late last month that his government will do its best to ensure the national debt will not exceed the statutory ceiling under the Loan (Local) Act and Government Funding Act due to its prudent management of the nation’s finances.

Slow growth
Najib, who is also Finance Minister, claimed that the national debt now stood at 53.5% of the GDP, which was RM881 billion in 2011 after a recent revision, leaving Malaysia just RM13 billion shy of the 55% debt limit.

Malaysia’s deficit stood at a 22-year high of over 7% in 2009 but dropped to 4.8% of GDP last year after Najib promised to make cutting the deficit one of his administration’s key target.

But economic growth slowed down and recorded a third consecutive quarterly dip to 4.7% in the first three months of the year, drawing scepticism that the federal government can keep spending in check.

The 4.7% fiscal deficit for this year is based on a projected GDP growth of 5% to 6%.

Jala, however, said that Malaysia has to be realistic in its fiscal management in light of the global economic situation.

“We live in a real world where the global economy is tied to our trade and exports have slowed,” he said.