KL wants extra $6b to cover overspending

KL wants extra $6b to cover overspending
Customers leave with their groceries after shopping at a supermarket in Kuala Lumpur August 28, 2013. In a surprise move, the Malaysian government asked for an extra RM14.1 billion (S$5.57 billion) to cover unplanned overspending this year, raising concerns over its ability to pare down its national debt, currently at critical levels. -- FILE PHOTO: REUTERS

In a surprise move, the Malaysian government asked for an extra RM14.1 billion (S$5.57 billion) to cover unplanned overspending this year, raising concerns over its ability to pare down its national debt, currently at critical levels.

The amount is expected to be used to pay civil servants and for other operating expenses incurred during the elections.

If passed, the Treasury and the Education and Health ministries will receive the bulk of the money.

Deputy Finance Minister Ahmad Maslan on Monday tabled a supplementary bill for the RM14.1 billion, which works out to about 5.6 per cent of the RM251.6 billion Budget approved for this year.

Supplementary bills are typically used to cover unforeseen expenses such as for disaster relief and combating viral outbreaks.

In July, the government received an additional RM13 billion to cover gaps in the 2012 Budget.

Economists say that the latest request is worrying at a time when the government is already under severe pressure to reduce its national debt, which is approaching a self-imposed limit of 55 per cent of gross domestic product (GDP).

"This bill is fiscally not prudent and could rattle the market if a deficit of 4 per cent or less is not met this year," warned Dr Yeah Kim Leng, chief economist at RAM ratings company.

Prime Minister Najib Razak has pledged to keep the budget deficit to 4 per cent this year, noting that it was already down to 4.5 per cent last year from 6.7 per cent in 2009.

Dr Yeah said the additional fund request could be partly due to unbudgeted spending, including pre-election handouts like the 1Malaysia People's Assistance Fund, which gave RM500 each to some 4.2 million households with income of less than RM3,000 a month.

More about

Purchase this article for republication.

BRANDINSIDER

SPONSORED

Most Read

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.