3 Malaysia Today
Malaysia, too, has less fiscal options than before in weathering the impending turbulence:
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In 2007, before the 2008/09 crisis, our federal budget deficit was RM21 billion and total federal debt was RM267 billion, equivalent to 42% of GDP;
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For 2011, our federal budget deficit is expected to hit RM45 billion and total federal debt was already RM437 billion as at the end of June, equivalent to about 53% of GDP8;
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Indeed, ratings agency Fitch downgraded our long term RM sovereign debt rating to A from A+ in Feb 2009. Malaysiahas not been able to secure a return to A+ even though the global economic situation subsequently stabilised and improved. The Barisan Nasional government continued to expand spending after prime minister Najib assumed leadership in Mar 2009, even though stimulus measures were no longer necessary.
The scope for pump-priming and stimulus measures in the face of another slowdown is now limited. But we still have strengths and alternatives:
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Our crude and edible palm oil resource base gives us a foundation of stability – we have basic fuel and food;
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Our potent, multi-ethnic mix of experienced, mature senior citizens, working families and young, enthusiastic youths can unify as Malaysians in the face of adversity and challenges, as shown by the Bersih 2.0 experience; and,
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Very importantly, we have hidden reserves. These reserves are in the fat and overbloated expenses incurred by the Barisan Nasional government, which can, and must be channeled back to uses that benefit the rakyat.
The Pakatan Rakyat Budget is based on the expectation of GDP growing by 4-4.5% in 20129.
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8Malaysian Economy, Second Quarter 2011, Ministry of Finance.
9 A selection of forecasts for 2011 and 2012: World Bank 4.8% and 5.7%; MIER 5.2% and 5.5%; Maybank 5.1% and 5.5% and RHB 4.3% and 4.5%. These forecasts were published before the International Monetary Fund (IMF) in mid-September slashed its forecast of global growth to 4.0% and 4.0%from the 4.3% and 4.5% that it had made in June.
[Pakatan Rakyat Budget 2012 released by Datuk Seri Anwar Ibrahim on behalf of PR in Kuala Lumpur on 4th October 2011. Part 4 of 10]
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