The government is planning to announce another economic stimulus package in addition to the RM7 billion programme it unveiled late last year, a minister said today.

nor mohamed yakcop "The prime minister has given the directive to begin preparing another package," newspaper reports quoted Second Finance Minister Nor Mohamed Yakcop as saying, in comments confirmed by his office.

"We have the capacity to lend some more due to the fact that we have managed to reduce the budget deficit from 5.5 percent of GDP in 2000 to 3.2 percent in 2007," he added.

Nor Mohamed said the impact from the first stimulus program unveiled last November would be felt around the first quarter of this year.

Budget deficit to increase

The government has said the first RM7 billion spending package, reaped from savings on reduced oil subsidies, is to be spent on "high-impact" projects including roads, schools and low-cost housing.

Deputy Prime Minister Najib Razak, who is also finance minister, has said that the government has the capacity to introduce more stimulus packages but that it would not allow the budget deficit to expand further.

"My priority is that I really want to save the people from having to go through hardships if the real economy is impacted," he said last month.

The government has already widened its deficit forecast for 2009 to 4.8 percent, from the 3.6 percent predicted in August, due to the additional government spending.