KUALA LUMPUR, Sept 28 ― Putrajaya’s RM251.6 billion for 2013 Budget unveiled today ― which is smaller than last year’s RM252.4 billion ― signals a slowdown in the government’s annual income that is putting Malaysia at real risk of undergoing a debt crisis in countries like Spain, the DAP’s Tony Pua said today.
He slammed the ruling Barisan Nasional (BN) government for failing to show “political will” needed if Malaysia were to avoid falling into a similar financial crisis.
“The Budget demonstrates no political will on the part of the federal government to make the necessary structural changes to the way we manage our Budget.
“We see a decline in the proportion of funds spent on development expenditure,” the opposition lawmaker said in a statement.
He criticised the Najib administration, saying it was not putting in serious effort to tackle the ballooning federal government debt.
“The marked decline in revenue growth will have a very significant impact on the government’s ability to impact growth in the Malaysian economy through fiscal means,”
Pua (picture) highlighted that revenue for next year is projected to grow to only RM208.6 billion, while debt is expected to balloon to as much as RM502 billion marking a whopping 107.4 per cent increase in debt over the past eight years and which he said has significantly raised the country’s structural debt service commitments.
He said that from 2003 to 2008, Malaysia’s debt servicing obligations grew 21.9 per cent from RM10.5 billion to RM12.8 billion, but had spiked in the last five years by 73.4 per cent.
The official federal government debt is also expected to hike as a proportion of gross domestic product (GDP) from 51.8 per cent to 53.7 per cent, putting it below the 55 per cent legal federal government debt limit, Pua said.
The DAP publicity secretary said the government had also been consistently cutting back on development spending “which will create greater multiplier effects on our economy”.
“What is frightening is, the government’s contingent liability is expected to increase exponentially in 2013 due to the expenditure for the RM53 billion MRT project as well as other mega-infrastructure projects,” he added.
A contingent liability is defined as an obligation to pay back debt depending on future events, such as outstanding lawsuits, liquidated damages and destruction by flood.
Drawing attention to Spain, he noted that the European nation’s “official” debt to GDP ratio of 68.5 per cent but it was now still facing a major financial crisis that needed it to be bailed out by hundreds of billions of Euros, which had caused a near collapse of its economy due to various contingent liability and bank bailouts.
“We must not allow ourselves to get entangled in a similar crisis,” Pua said.