Malaysia: Finance minister prepares expansionary budget - Financial Times, October 29
By Jonathan Birchall in Kuala Lumpur
Malaysia's finance minister, Daim Zainuddin, will appear
before parliament in Kuala Lumpur today to outline his
government's budget for the year starting January 1, 2000. Mr
Daim is expected to announce a
broadly expansionary budget, with the twin aims of maintaining
Malaysia's economic recovery and building support for
the government ahead of general elections due by the
middle of next year.
"I think we can expect to see a range of measures, such
as tax cuts and efforts to promote low-income housing
and road development, which will please both the voters
and the business community," said one Kuala
Lumpur-based securities analyst.
Mohamad Mahathir, the prime minister, yesterday
denied that the budget would be shaped by political
considerations but said it would include increased
government spending to reflect the continuing
improvement in the Malaysian economy.
"The government expects next year's economy to show
a better performance, and therefore we can afford to be
more generous," he said on Malaysian television.
Malaysia's economy grew by 4.1 per cent in the second
quarter of the year, after shrinking by 1.3 per cent in the
first quarter. Analysts are predicting growth of around 7
per cent in the third quarter, driven by strong growth in
exports and increasing domestic demand. The
government has stuck to the official forecast of one per
cent growth for the whole year, made in the last budget,
against analysts' forecasts of 4.5 to 5.5 per cent. The
budget for the current year increased the country's
projected budget deficit to 6 per cent of gross domestic
product, up from 3.7 per cent in 1998, after five previous
years of budget surplus.
SG Securities predicts that the government's projected
deficit for next year could rise to 8 per cent as the result
of new measures to promote growth.
Today's budget is also something of a rarity in Malaysia,
as the government will be required to deliver a new
version of its spending plans within a matter of months to
the parliament which is formed after the forthcoming
general elections.
While some political observers in Kuala Lumpur argue
that Dr Mahathir may call for polls before the end of
November, majority opinion favours early next year,
following the conclusion of the ongoing trial of Dr
Mahathir's sacked deputy, Anwar Ibrahim. |
