PUTRAJAYA, March 29 – The Opposition’s manifesto, if implemented, will lead to the government’s fiscal deficit to swell to 11.5 per cent within a year, thus burdening the government with heavy debts. The present government has envisaged to maintainn the fiscal deficit level at four per cent this year.
In cautioning the people on the possible negative multipier effects stemming from the manifesto, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah(pic) said the government’s debts would spiral to 62.1 per cent from below 54.6 per cent currently to the national gross domestic product (GDP).
“We will have to grapple with a more serious current account deficit, that is, our revenue is insufficient to finance the government’s operations expenditure.
“This means, the government has to borrow money to pay civil servants’ salary, their pension and subsidies. Borrowing more money will lead the government to a more serious financial and economic crises as being experienced by several European Union (EU) member countries,” he said.
The Brussels-headquartered EU is a 27-member grouping of european nations. Ahmad Husni said the present government had managed to reduce the fiscal deficit from 6.7 per cent in 2009 to 4.5 per cent last year.
“Not stopping at that, the government is committed to take pre-emptive and pro-active measures to trim down the deficit to four per cent this year and to around three per cent in 2015,” he said.
The Minister said the present Barisan Nasional governed federal government only borrowed to fund development expenditures as the economic mutlipier effects and spinoffs would guarantee the nation’s prosperity and the people’s well-being.
“We must maintain operating surplus in our prudent financial management. We don’t want to borrow money merely to pay government employees’ salary and other related expenses in our operational budget.
“This is the philosophy that has been implemented by the BN-led federal government thus far.
“Therefore, going by the Opposition’s manifesto, they will burst their operational expenditure, meaning the government’s revenue cannot meet the operational expenditure, which is totally against our prudent financing concept,” he said.
Asked whether the government could manage to bring down the physical deficit to lower than 54.6 per cent currently, Ahmad Husni zaid the government had meticulously practised prudent financial management by ensuring that the federal government’s debts did not exceed 55 per cent of the GDP. He said the government could maintain the debt rate at below 55 per cent until 2020, aided by the encouraging GDP growth, higher tax collection and lower deficit level.
Ahmad Husni said the Opposition’s manifesto did not pay heed to the implications to the government’s financial status and market distortions to the national economy. The Opposition’s manifesto was drawn up based on inaccurate financial calculations, which could lead to contraction and shrinking of the national economy, resulting in systemic ramifications.
“This will cause our country’s rating to fall, foreign direct investments will take a beating and unemployment level will rise, leading to the collapse of the national economy and adversely affecting the people’s well-being,” he said.
Citing an example, Ahmad Husni said unemployment rate in several EU member states had soared to a staggering 31 per cent, civil servants’ salary was slashed to up to 50 per cent and housing loan borrowers saw their houses being repossessed for failure to service the loan.
BERNAMA
