Politically, we already struggling and that would not need much introduction. I thought the government would be serious enough to set things right in the 2009 Budget, at least to shield its people in this period of 'exceptional uncertainty', politically, economically and socially. I have been reading Badawi's budget speech at least two times over the last weekend, but am still struggling to find good words to make peace with my angry soul. With minor tax cuts, higher spending allocation to long-neglected Sabah and Sarawak coupled with bigger amount of welfare assistance including a month bonus to civil servants, this is no more than a 'panadol' solution to a far more serious illness that need far serious efforts to fix it. Are they run out of options, or they are just checking the IQ of fellow Malaysians?
It seems that words like sustainable job creations, income growth and business opportunity are definitely not part of the vocabulary of the 2009 Budget! If the projected 5.4% real GDP growth in 2009 is realizable, then the foundation is not build to take even a shock of Ritcher Scale 3.
The whole spending program is premised on contribution of oil income (around two fifths of total revenues). As such, the biggest concern is that wider deficit takes risks with the government's finances in the event of lower oil prices. This means the rest of the economy benefits from government spending is estimated at around 30% of GDP, in return only have to pay the government tax and other revenues of around 14% of GDP in revenues.
If that situation panned out, Malaysian government may have to rely more on bond sales to finance the book. In 2009, the government is projected to sell some RM60bn worth of papers (RM54.1bn in 2007) – the highest in a decade. That said, it is no doubt a bad news for bond market, especially if I view it together with the present setting of monetary policy. While many people thinks that the risk to policy rates (overnight policy rate) is to the upside in Malaysia, the recent BNM rethoric still suggest otherwise, despite a much looser fiscal policy settings.
By implication, Ringgit Malaysia will continue to be under downward pressure, until either the government is seriously putting its thinking cap to solve our structural concern, or alternatively is ready to find better usage of our strong current account surplus.
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4 comments:
well coin term "panadol budget" fit the current situation well. his eye on november UMNO election, every thing else distance second. this is not budget, but belanjawan where you belanja only. no need to concern about income. Maybe it will cost government rm120 just to process a plane ticket back to sabah. no wonder gov operational cost has increase 90+% since badawi take office.
2009 budget is a clear reflection of 'tidak apa' attitude of PM. Seems that his experience of long years in government is not reflected in his works. 2009 budget is another sad case to report!
if malaysia where a company, the growth rate of operational expenditure will surely a super miricle turnover and sustainable margins to keep the company alive. Can a country be run or its budget rational be very different from an company. Many time leader of a country do claims they are the CEO of a country.
correction: - if malaysia were a company, the type of expenditure growth rate will surely bankrupt a co. Unless it achive a super miricle turnover and sustainable margins to keep the company alive. Are there significant different in financial rational between running a country and a company Many time leader of a country do claims they are the CEO of a country.
Just a though
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