Anwar says slowdown warrants fiscal debate, retabling of Budget

KUALA LUMPUR, May 30 — Datuk Seri Anwar Ibrahim renewed today calls for a debate on economic policy with archrival Datuk Seri Najib Razak after Malaysia posted a 4.7 per cent growth for the first quarter, short of the five to six per cent projected in the latter’s Budget 2012.

The opposition leader said in a statement the “serious repercussion” to public finances from the slowdown also warranted a retabling of the Budget in next month’s parliamentary session as the growth assumptions used to derive the Treasury’s revenue and fiscal deficit were wrong.

“I have cautioned Najib that his tendency to manipulate economic growth projection to present a much lower deficit target is irresponsible.

“If Barisan Nasional (BN) continues to spend according to the current Budget, this will have a severe impact on the deficit level and can breach the 55 per cent statutory limit of debt-to-GDP ratio,” the former deputy prime minister and finance minister said.

Prime Minister Najib, who is also the current finance minister, said yesterday the government will ensure that Malaysia’s debt will not exceed the statutory ceiling under the Loan (Local) Act and Government Funding Act due to its prudent management of the nation’s finances.

The BN chief also accused Anwar’s Pakatan Rakyat (PR) of making “far-fetched” populist promises such as abolishing the National Higher Education Fund Corporation (PTPTN) student loan scheme, which he said would cost RM45 billion, and setting an unrealistic RM4,000 minimum wage policy.

But Anwar said today the Umno president was misleading the public, pointing out that PR was targeting to make RM4,000 the minimum household income within five years of taking federal power.

“The economic target set by PR that the combined income of each Malaysian family should be at least RM4,000 a month is not only morally right but achievable through a combination of pro-people economic policies proposed,” the Permatang Pauh MP said.

He also told Najib if “he is confident that PR will not be able to deliver our economic promises, he must be bold enough to defend his conviction in a public debate.”

“Najib should not criticise our economic policies when he avoided a public debate on such policies. His refusal to debate with me on economic policies can only confirm the assertion that he is leading a weak government — economically, morally and intellectually.”

 Malaysia reported a 4.7 per cent GDP growth for the first three months of the year, a third consecutive quarterly drop since it posted a 7.2 per cent increase in Q2 2011.

Analysts have warned Malaysia to brace for a significant slowdown here due to rising linkages with top trade partners including China, the world’s second largest market which economists say is headed for a sixth consecutive quarterly drop in growth with worse to come.

A Greek exit from the euro zone, which is  growing threat, would cause a second recession in as little as four years in Malaysia as the knock-on damage to Europe poses a threat to the global economy, Bloomberg reported analysts and economists as saying today.

The World Bank also urged Malaysia last week to expedite reforms such as subsidy cuts and broadening the tax base, key initiatives that have stalled ahead of an impending federal election, if it wants to achieve Putrajaya’s target of being a high-income economy by 2020.