KUALA LUMPUR: Malaysian premier Najib Razak provided a fresh round of handouts yesterday as he announced a voter-friendly budget for 2013 aimed at shoring up support ahead of what is predicted to be a tough election.
His Barisan Nasional coalition, which has ruled Malaysia for 55 years, must face a national ballot by June but is also under pressure to rein in public debt as rating agencies warn of downgrades.
To bolster the country’s export-oriented economy and beef up political support, Najib embarked on a spending spree including 3.0bn ringgit ($979m) in direct cash payments, tax cuts and bonuses of 1.5 month’s salary for 1.3m civil servants.
Najib told parliament the government will repeat this year’s 500 ringgit given to households earning up to 3,000 ringgit a month and also hand out 250 ringgit to unmarried people aged 21 and above earning 2,000 or less per month.
The prime minister also expanded stimulus measures to support the economy in his last budget before polls, where he will face a tough test against Anwar Ibrahim, who leads the three-party opposition Pakatan Rakyat alliance.
Najib, who is also finance minister, announced a one percentage point cut in personal income tax for those earning up to 50,000 ringgit in chargeable income per year and 2.0bn ringgit to support sustainable green projects.
“The 2013 budget will focus on improving the quality of life of the people, ensuring sustainable growth, spending prudently and reducing the fiscal deficit with the overall objective of prioritising the well being of the people,” he said.
Ibrahim Suffian, director of Merdeka Centre, Malaysia’s top polling organisation, said that Najib could expect a “bounce” in his popularity with the handouts.
“It is a populist budget. Najib would regain some popular support but my concern is whether it will last for long. If he holds polls long after dishing out the handouts, his popularity will fade,” he said.
But Najib said there would be a modest cut in sugar subsidy to reduce government expenses and vowed that government debt will not exceed 55 percent of GDP.
Standard & Poor’s and Fitch recently warned that rising fiscal pressures in Southeast Asia’s third largest economy could lead to a downgrade of its credit rating.
The treasury’s budget deficit is projected to be 4.5 percent this year, while public debt has reached 53.7 percent of gross domestic product this year.
But Malaysia plans to reduce its budget shortfall next year by generating more revenue and spending less, leading to a lower fiscal deficit of four percent as the government targets a three percent gap by 2005.
AFP
