Pakatan Rakyat's shadow 2013 budget is “mathematically wrong”, misleading, and will definitely increase Malaysia’s fiscal deficit and debt against the gross domestic product (GDP) to 7.2 percent and 57.8 percent respectively, said Second Finance Minister Ahmad Husni Hanadzlah.

He said claims by the opposition that the latter’s proposed budget will reduce the fiscal deficit to 3.5 percent was a fine example of “bad mathematics”.

“The treasury sat down and looked at both the budgets. Then we found out that the government’s budget was complete and well-explained.

“As such, we thought the government should wait no more in coming forward and explaining to Malaysians which is a serious and responsible budget.

“Their (Pakatan) budget is incomplete. They did not include most of the operating expenses in their budget. That is why Pakatan can come up with a lower operating expenditure,” he told reporters in Putrajaya yesterday.

husni eon bank function 120310 ahmad husni Ahmad Husni ( left ) said Pakatan’s proposed budget will force the government to spend RM224.3 billion on operating expenses, far more than the RM185.3 billion claimed by the opposition.

He added that the shadow budget did not reflect the real position of the government’s financial performance and also did not take into account the plans which were unveiled by the opposition in their specific budget.

Pakatan’s proposed budget which showed a reduction of RM2.6 billion to RM56 billion for government servants’ emoluments, would also translate into shedding 72,000 jobs based on hypothetical average salary of RM3,000 a month or RM36,000 a year, he said.

“Among the plans which were not taken into account in calculating the country’s deficit was Pakatan’s proposed minimum wage adjustment, annual bonus handouts for senior citizens, abolishment of tolls and the debt that will be borne by the government through the abolishment of PTPTN (National Higher Education Fund Corporation),” he said.

Ahmad Husni said if the proposed minimum wage adjustment is implemented, the government will need an extra allocation of RM4.4 billion while the abolishment of tolls will cost the government another RM6 billion through higher subsidies.

“They are talking about lowering subsidies and gaining income from there. But the plans unveiled by them will not reduce subsidies beared by the government but will instead increase them significantly.

‘Subsidy reduction plan not viable’

“Their plan to reduce subsidies is also not viable because that means the prices of basic necessities such as rice, sugar, cooking oil and petrol will be forced to increase as the items constitute about 61 percent from the current subsidy mechanism,” he added.

On PTPTN, Ahmad Husni said if it is abolished, then the government have to bear the current PTPTN debt of RM31 billion and at the same time prepare an annual fund of RM5 billion to dish out to new tertiary level students.

Pakatan’s budget will also force the debt to GDP ratio to shoot up to 57.8 percent, far higher than the maximum cap fixed by the government at 55 percent.

“If the debt to GDP ratio goes up like that, Malaysia’s sovereign rating will fall to a lower level and that will result in higher loan cost and poorer confidence level among foreign investors,” he said.

Ahmad Husni also said if the opposition’s plan to increase state royalties to 20 percent is taken into account in the calculation of the fiscal deficit, then it has bright potential to shoot further up to eight percent.

“If that was taken into account, it will cause a downfall in the earnings derived from petroleum tax as well as dividend to the federal government. Thus, the deficit will further go up.

“That will also result in lower earnings for national petroleum company, Petronas Bhd. For that, I expect Petronas to come up with a statement to explain how to deal with the Pakatan’s plan.

“In a nutshell, if all these plans by Pakatan are implemented without proper fiscal management and steady income surplus, then Malaysia might go bankrupt,” Ahmad Husni said.

- Bernama

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