The Dandelions

.. the mutual admiration and bashing society.

Everything Is Still Aye’ OK!!!! (Thru Rose-Tinted Glasses?)

Posted by ErnieJean on February 3, 2009

Remember when Najib, who apparently is currently seeing his popularity/approval ratings dip faster than “speedy gonzales”, first unveiled his Economic Stimulus Package worth RM7 Billion?

NO?

Got such package in the first place meh?

Well, I certainly didn’t get stimulated, did you?

Nor did I see anyone else being stimulated………however, perhaps if I were a Pakatan Rakyat MP or ADUN, there may be a “stimulation” or two, I suspect😛

So, obviously as predicted by all of us Malaysians, the RM7 Billion did absolutely nothing for anyone……..

KUALA LUMPUR, Feb 2 (Reuters) – Fitch Ratings lowered Malaysia’s local currency rating outlook to negative from stable, blaming its high fiscal deficit and public debt and on expectations its fiscal position would worsen this year and next.

The agency also affirmed the country’s local currency rating at A-plus. The outlook on the A-minus foreign currency rating has been affirmed at stable.

“The global economic headwinds will further reduce government revenues while the government’s economic stimulation measures will keep expenditure high despite the expected drop in energy subsidies,” the agency said in a statement.

Fitch also said the government had been slow in implementing its structural fiscal reforms, pointing to the country’s tax base of 20 percent of its gross domestic product, which it termed as narrow, and reliance on oil which formed 40 percent of revenue. Malaysia’s fiscal deficit was seen rising to 5.7 percent of GDP in 2009 and further to 7.4 percent in 2010, from an estimated 4.6 percent in 2008, Fitch said.

Last week Deputy Prime Minister Najib Razak, who is also the finance minister, said the deficit was likely to overshoot the government forecast of 4.8 percent this year after a second economic stimulus package worth 7 billion ringgit ($1.94 billion) is introduced.

“We expect the second stimulus package to be announced this month, and this is the basis for the rating outlook downgrade, because revenue will be pressured and there will be a need to spend more to help the economy,” said Forecast economist Joanna Tan.

“As for the impact on currency, this will be a ringgit negative, and no doubt borrowing costs will be adversely impacted, but we also note long term foreign currency ratings remain the same.”

Fitch said economic growth would decelerate to 1.5 percent in 2009 from an expected 5.5 percent in 2008. The government forecast for 2009 economic growth stands at 3.5 percent.

“The ratios of debt and net debt to GDP, which are worse than the A group’s medians, are thus expected to deteriorate. The government’s interest payments/revenue ratio is also higher than the A median,” Fitch said in its statement.

The agency said the country’s debt-GDP ratio would rise to 50 percent in 2010 from 40 percent in 2008, with more than half of its borrowings maturing within the next five years.

Fitch said that only 7 percent of Malaysia’s debt was foreign currency denominated and over 90 percent of the local currency debt is held by domestic financial institutions and therefore it had little exposure to currency and re-financing risks. ($1=3.605 Malaysian Ringgit) (Reporting by Varsha Tickoo, Razak Ahmad and Umesh Desai in HONG KONG; Editing by Kazunori Takada)

Now that Najib is proposing “Stimulation Package No.2”, can someone please explain to an “economic-bimbo” like myself, where on earth is he planning to dig up that extra budget? Borrow some more? As it is, isn’t Malaysia’s budget deficit at a worrying level already?

“The prime minister has given the directive to begin preparing another package. We have the capacity to (borrow) some more due to the fact that we have managed to reduce the budget deficit from 5.5 percent of GDP in 2000 to 3.2 percent in 2007,” so explained the 2nd Finance Minister.

Erm, a thought here……..our Prime Minister is still the Finance Minister meh? Shouldn’t the directive come from the Finance Minister himself?

Is borrowing the best and only solution? What sort of percentage from the stimulation package will be filtered down to eventually reach the common rakyat, after going thru 4-5 levels of middlemen?

On second thoughts, do I even need an answer when it’s all to obvious?

Yes, encouraging spending by pumping money into the economy may, theoretically, help the rakyat tide over the hard times (that is if we, the rakyat ever get to see that money-lah)……..but nothing, and I mean NOTHING, will ever work if the blatant corruption, leakages, wastages and crappy projects are still rampant and not stopped!!

And my gut feeling tells me nothing, not under the current PM’s tenure, nor his successor, will be done to correct the current predicament………not when political survival, and not the country’s economic survival, remains their main, if not one and only, priority.

 

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