Guan Eng rubbishes Nomura’s report on budget deficit

Finance Minister Lim Guan Eng says the government is confident of achieving a lower budget deficit than what has been projected by a Japanese research house.

PETALING JAYA: Finance Minister Lim Guan Eng today rebutted a report by Nomura Global Research that Malaysia would record a budget deficit of 3.9% for 2018, saying Putrajaya was confident of achieving a budget deficit of 3.7% for 2018 and 3.4% for this year.

Lim acknowledged that the abolition of the goods and services tax (GST) last year had left the government a hole of RM20 billion.

The GST was replaced with the sales and service tax (SST) on Sept 1, 2018.

“However, SST collections have exceeded our projections for 2018. We initially thought we will collect RM4 billion but we managed to collect RM5.4 billion.

“That was an increase of 34%,” he said in a statement.

Lim also denied a claim by Nomura that the Pakatan Harapan (PH) government had been slow to implement its promised institutional reforms.

He said the government had taken steps to introduce reforms through various measures.

They included zero-based budgeting, open tenders, migration from cash to accrual-basis accounting in public finance, reprioritisation of mega projects and the formation of a tax reforms committee and a public finance committee to diversify government revenue.

He said the government targeted to complete its fiscal reforms in three years.

Lim said international rating agencies such Moody’s, Standard & Poors and Fitch understood that the reforms would take time and had maintained Malaysia’s rating at A3 or A-.

In its report released recently, Nomura had also voiced concern that Malaysia was too dependent on Petronas’ revenues to bankroll its budget.

Lim countered this by saying that in 2009, Malaysia had relied on Petronas for 41.3% of its income, but this figure had now been reduced to 19.5%. - FMT