Malaysia PM de­liv­ers bud­get amid op­po­si­tion protests

Na­jib aims to keep bud­get deficit to 3% of GDP

Kuwait Times - - BUSINESS -

KUALA LUMPUR: Malaysia’s Prime Min­is­ter Na­jib Razak courted vot­ers with perks and sub­si­dies yes­ter­day but was greeted by an­gry protests from op­po­si­tion lead­ers un­happy with his han­dling of a cor­rup­tion scan­dal at state fund 1Malaysia Devel­op­ment Ber­had (1MDB). Na­jib, eye­ing pos­si­ble early elec­tions next year, also pledged in his bud­get to cut a large fis­cal deficit to keep the econ­omy on track for strong growth.

South­east Asia’s sec­ond-largest oil pro­ducer was left reel­ing from the slump in global crude prices late last year, forc­ing it to slash its 2016 bud­get in Jan­uary and lower its growth tar­get to be­tween 4 and 4.5 per­cent. Na­jib said the out­look was im­prov­ing and ex­pects growth to pick up marginally in 2017 to be­tween 4 and 5 per­cent.

Spend­ing will rise 3.4 per­cent to 260.8 bil­lion ring­git ($62.3 bil­lion) next year, but the bud­get deficit would be cut to 3 per­cent of GDP from a tar­get of 3.1 per­cent this year, he said. Rat­ings agen­cies have warned of a pos­si­ble down­grade if the bud­get deficit is too large. “We are now on the right track, as we have and are tak­ing firm, bold and right de­ci­sions de­spite the mea­sures be­ing un­pop­u­lar,” the prime min­is­ter said in his speech in par­lia­ment.

Malaysia’s stock mar­ket and ring­git cur­rency were unmoved. Na­jib was widely ex­pected to present a pop­ulist bud­get toshore up sup­port ahead of elec­tions he could call in 2017.

He an­nounced an al­lo­ca­tion of 6.8 bil­lion ring­git to the gov­ern­ment’s an­nual cash hand­outs pro­gram, with 10 bil­lion ring­git to be set aside for sub­si­dies next year. The gov­ern­ment’s hous­ing pro­gram for first time home­buy­ers would be ex­panded, while a spe­cial fund of up to 3 bil­lion ring­git would be al­lo­cated for in­vest­ment in small- and mid-cap com­pa­nies.

Na­jib also an­nounced tax re­lief on con­sumer items and re­lief for work­ing moth­ers and par­ents of pre-school­ers. “In our view, it re­mains a fine bal­anc­ing act to main­tain fis­cal pru­dence and growth, with oil as the wild card,” said Wei­wen Ng, an an­a­lyst at ANZ Re­search.

OP­PO­SI­TION WALK­OUT

Na­jib has been un­der fire over al­le­ga­tions of cor­rup­tion at 1MDB, the in­debted state fund whose ad­vi­sory board he chairs. Law­suits filed by the US Jus­tice Depart­ment in July seek to seize more than $1 bil­lion of as­sets al­legedly si­phoned off from 1MDB, a fund Na­jib es­tab­lished in 2009.

The law­suits do not name Na­jib but say more than $700 mil­lion of mis­ap­pro­pri­ated funds flowed into the ac­counts of “Malaysian Of­fi­cial 1”, who US and Malaysian of­fi­cials have iden­ti­fied as Na­jib. The prime min­is­ter was booed by op­po­si­tion law­mak­ers through­out his speech. The speaker then asked law­mak­ers not in­ter­ested in lis­ten­ing to the bud­get to leave. About 80 per­cent of the op­po­si­tion bench walked out, de­scrib­ing the bud­get as un­re­al­is­tic, said op­po­si­tion law­maker Tian Chua. — Reuters

—AFP

PUTRAJAYA: Malaysia’s Prime Min­is­ter Na­jib Razak poses with his brief­case as he leaves to un­veil the 2017 fi­nan­cial bud­get to Par­lia­ment House, out­side the Fi­nance Min­istry in Putrajaya yes­ter­day.

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