Election budget may curb gains in cutting deficit, economists say

KUALA LUMPUR, Sept 26 ― Datuk Seri Najib Razak’s bid to boost voter support for his Barisan Nasional (BN) coalition ahead of polls may see more handouts to the lower-income groups and civil servants that will likely take a toll on Malaysia’s tackling of its chronic budget deficit, Bloomberg reported today. Citing eight economists it had polled recently ahead of the 2013 Budget announcement this Friday, the international business wire service reported that Malaysia will likely post a deficit estimated at 4.3 per cent of its gross domestic product (GDP) ― going over the four per cent line for the sixth year despite the government’s 4.7 per cent gap last year. “This will likely be another populist budget and the last spending spree before elections are called,” Chua Hak Bin, an economist at Bank of America Merrill Lynch in Singapore, was cited as saying. “Measures to seriously tackle the fiscal deficit and rising public debt will likely be absent. Fiscal reforms will have to come next year, after the general election,” the economist who has covered Malaysia for more than 10 years told Bloomberg. Citigroup Incorporated estimates that Budget 2013 will likely grow to RM259 billion compared to last year’s RM232.8 billion, Bloomberg reported, after the government proposed to raise its previous budget by RM13.4 billion in June. Read more... Jarumemas: Hopefully the new budget will make the lower income group happy.