Supplementary Bill widens national deficit

Relying on supplementary budgets hinders growth and paces down fiscal consolidation, says Nurul Izzah

KUALA LUMPUR: The government should not hide behind fictitious economy projections but rather come to terms with reality; as it is unnecessary to have Supplementary Bill annually, says Lembah Pantai MP Nurul Izzah Anwar.

Pakatan Rakyat views with great concern the first Supplementary Bill on operating expenditure for 2013 worth RM15 billion, comprising of RM14.13 billion for ‘perbelanjaan bekal’ and RM 888.46 for ‘perbelanjaan tanggungan’ which was tabled in parliament yesterday.

According to Nurul, the supplementary budget will adversely affect the nation’s public finances in general and the pace of fiscal consolidation process in the immediate to medium term.

The PKR leader also forecast that if no changes happen in revenue, development expenditure, loan recovery and the GDP, the additional operating expenditure will cause the ratio of budget deficit against GDP for 2013 to jump to 5.5%

Nurul stressed that 5.5% ratio will be above the 4% projection target tabled in Budget 2013 on 28 September 2012.

The government has tabled its second supplementary bill in three months as it sought an additional RM14 billion for government expenses from the Parliament yesterday as reported in the dailies.

After seeking RM13 billion in July under the 2012 fiscal year, the government is seeking the current additional sum under the 2013 fiscal year.

The Treasury Department is seeking an additional RM600 million while the Education and Health Ministries top the list, seeking RM322 million and RM300 million respectively.

The supplementary bill is being sought merely weeks away from the tabling of the 2014 Budget, which is expected to be tabled by the end of October by Prime Minister Najib Tun Razak.

“The BN government has failed to achieve their own deficit to GDP targets whilst asking Malaysians to tighten their purses for the sake of a more sustainable future,” says Nurul.

She cited the consequences faced in 2012 where by the government failed to achieve the 4.5% target for deficit to GDP ratio.

“It ballooned to 4.9% after taking into account all supplementary bills amounting to RM 28.5 billion,” added Nurul

Nurul also added that the government failed to display meaningful progress towards achieving a self imposed commitments to bring down the budget deficit-to-GDP ratio to 3% by 2015 and maintain a public debt ceiling below 55% at all times.

“If this is not well maintained, then it may risk facing an extremely adverse reaction in the equity, fixed market and foreign exchange markets,” added Nurul.

Pakatan’s Alternative Budget

Meanwhile, Kuala Krai MP Dr Mohd Hatta Ramli, who was at the joint press conference, announced that an alternative budget will be presented before Najib Tun Razak unfolds the 2014 national budget

In the alternative budget, they will address methods to tackle the fiscal policies, reduce leakages and ensure proper economic governance, said Hatta Ramli.

Pakatan Rakyat also remain convinced that genuine fiscal reforms will go a long way in tempering Malaysia’s vulnerabilities to future negative shocks and relieving pressure on the nation’s sovereign credit profile.

Nurul further stressed that genuine reforms hinges on transparent and honest utilization of the country’s coffers