Malaysia

Report: Budget restructuring leaves several ministries in the lurch

Bank Islam chief economist Mohd Afzanizam Abdul Rashid said the government must plan the right strategy that balances the need to improve the country's fiscal situation with budgeted programmes to ensure that the nation growth remains sustainable. — Reuters pic
Bank Islam chief economist Mohd Afzanizam Abdul Rashid said the government must plan the right strategy that balances the need to improve the country's fiscal situation with budgeted programmes to ensure that the nation growth remains sustainable. — Reuters pic

PETALING JAYA, Sept 17 — After the government’s budget restructuring for this year last month, three ministries reportedly did not receive their allocated funds.

Local daily Berita Harian reported that the affected ministries were the Health Ministry, the Tourism, Arts and Culture Ministry, and the Energy, Technology, Science, Climate Change and Environment Ministry.

Among the schemes and programmes affected included the RM3 billion Green Technology Financing Scheme 2.0, RM2 billion for the Special Tourism Fund for Small and Medium Enterprise, and RM1 billion for tourism infrastructure development funds.

“This situation has resulted in the implementing agencies facing a dilemma over programmes or projects planned for 2018, some of which have already been launched and in demand, whether to be continued, suspend or cancelled,” said a source.

A financial analyst who wished to remain anonymous said if the matter was true, it could affect the nation’s gross domestic product (GDP) growth.

“If this is indeed true, it would definitely give an impact to the nation’s GDP growth, meaning a more sluggish economic growth that is worrisome.

“Therefore, the government must create demand through public investments,’’ the analyst was quoted saying.

The analyst reportedly said GDP growth was supported by strong consumer spending before, reaching eight per cent growth in the previous financial quarter of 2018.

However the analyst was doubtful that the strong consumer spending growth could be maintained even after the Goods and Services Tax (GST) was abolished.

“Consumer spending could not maintain at eight per cent growth all the time and it may return to a normal growth rate of around 6.9 per cent,’’ said the analyst.

Bank Islam chief economist Mohd Afzanizam Abdul Rashid said according to Malaysia’s second quarter GDP report, the economy was clearly affected due to reduced public investment at 9.8 per cent.

“The government must plan the right strategy that balances the need to improve our fiscal situation with budgeted programmes to ensure that the nation growth remains sustainable.

“We are aware that the growth prospect for foreign economies remains challenging following the trade war initiated by the US will give out a negative impact to the global economy,’’ he said.

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