By Siva Sithraputhran and Anuradha Raghu
Sep 26, 2012
Reuters
KUALA LUMPUR (Reuters) – Malaysia’s Prime Minister Najib Razak is expected to unveil a voter-pleasing budget on Friday, placing the priority on winning a tough election above addressing the country’s rising debt burden.
Economists say Najib will likely delay much-needed reforms to broaden Malaysia’s tax base and reduce its dependence on oil revenues to at least next year, while announcing measures to help poorer families struggling with rising living costs.
Strong revenues in 2012 mean Najib can afford to be generous in the budget for next year without alarming financial markets, but further signs of fiscal slippage would add to investor concerns over a steady deterioration in Malaysia’s finances.
The Southeast Asian country’s public debt as a percentage of GDP is just short of its self-imposed ceiling of 55 percent – up from 43 percent in 2008 – while its budget deficit of 4.7 percent in the first half of 2012 is the third-biggest in Asia after Japan and India.
Fitch Ratings said in August that Malaysia’s public finances were weak compared with other countries on equivalent sovereign ratings (A minus) and on a par with heavily indebted countries such as Italy and Israel. Continue reading “Malaysia’s PM to bet on generous budget as election looms”