Additional benefits for the civil servants and the police force, and measures to cushion the people from the oil price hike are some of the key policies announced by Prime Minister Abdullah Ahmad Badawi in a 90-minute speech in Parliament today.

Deficit reduced to 3.5 percent

Government expects growth to remain strong - at 5.5% in 2006. The budget deficit, the ninth in a row, will be reduced to 3.5 percent in 2006.

The budget deficit was slashed from 5.6% of GDP in 2002 to 3.8% for 2005. The reduction of the deficit has been achieved without sacrificing economic growth. A narrower deficit may help Malaysia win a higher debt rating, reducing borrowing costs for the government and companies.