The government may opt for another round of pump-priming this year to boost the economy, Prime Minister Dr Mahathir Mohamad said today.

Mahathir, who is also finance minister, said the government would have to continue to provide incentives to draw foreign investment amid the poor global economic sentiment.

"We know that there is not much money going around and people are nervous. It's not what we can do. It's what they believe in the viability of their investments," he told reporters.

"At the same time, of course we have to boost our economy to maybe pump-priming, injecting more funds into circulation, spending money on quick projects."

Increasing spending

He did not elaborate but the central bank in November said the government may lift spending and loosen monetary policy to boost the economy in the event of a sharp global slowdown.

The government has increased spending to support the economy after a recession in 1998 and last year announced the country's fifth straight deficit budget for 2003 since the Asian economic crisis of 1997-98.

The premier also said the economy was likely to have grown four percent last year to reach the low end of the official forecast of four to five percent.

Mahathir, who has pledged to step down in October after 22 years at the helm, said 2002 gross domestic product (GDP) growth was hit by poor economic performance in the first quarter of the year.

"It's only in the third and fourth quarters that we did well. So averaging out, it comes out to four percent," he said.

The central bank is expected to release 2002 economic data at the end of February.

Mahathir has said GDP growth this year was expected to be similar to the 2002 estimate of four to five percent, compared with an official forecast of 6.0 to 6.5 percent. — AFP