The opposition’s manifesto, when implemented, will increase the government’s fiscal deficit to 11.5 per cent from the targeted four percent this year.

The deficit rate would rise in a year and burden the government with more debts, Second Finance Minister Ahmad Husni Hanadzlah said today.

He said the government’s debt would spiral to 62.1 percent to the national Gross Domestic Product (GDP).

“The fiscal deficit will be more serious, the government will be saddled with a heavy current account balance, that is, total revenue was inadequate to finance the government’s operations expenditure,” he told a media conference today.

Ahmad Husni said the present government had managed to reduce the fiscal deficit from 6.7 percent in 2009 to 4.5 percent last year.

“Not stopping at that, the government is committed to take pre-emptive and pro-active measures to trim down the deficit to four percent this year and to around three percent in 2015,” he said.

The minister said the present Barisan Nasional governed federal government only borrowed to fund development expenditures as the economic mutlipier effects and spinoffs would guarantee the nation’s prosperity and the people's well-being.

“We must maintain operating surplus in our prudent financial management. We don’t want to borrow money merely to pay government employees’ salary and other related expenses in our operational budget.

“This is the philosophy that has been implemented by the BN-led federal government thus far.

“Therefore, going by the opposition’s manifesto, they will burst their operational expenditure, meaning the government’s revenue cannot meet the operational expenditure, which is totally against our prudent financing concept,” he said.

Asked whether the government could manage to bring down the physical deficit to lower than 54.6 percent currently, Ahmad Husni zaid the government had meticulously practised prudent financial management by ensuring that the federal government’s debts did not exceed 55 percent of the GDP.

He said the government could maintain the debt rate at below 55 percent until 2020, aided by the encouraging GDP growth, higher tax collection and lower deficit level.

Ahmad Husni said the opposition’s manifesto did not pay heed to the implications to the government’s financial status and market distortions to the national economy.

‘Inaccurate financial calculations’

The opposition’s manifesto was drawn up based on inaccurate financial calculations, which could lead to contraction and shrinking of the national economy, resulting in systemic ramifications.

“This will cause our country’s rating to fall, foreign direct investments will take a beating and unemployment level will rise, leading to the collapse of the national economy and adversely affecting the people's well-being,” he said.

Citing an example, Ahmad Husni said the unemployment rate in several EU member states had soared to a staggering 31 percent, civil servants’ salary was slashed to up to 50 percent and housing loan borrowers saw their houses being repossessed for failure to service the loan.

- Bernama

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