KUALA LUMPUR, Oct 18 — Prime Minister Tun Dr Mahathir Mohamad said the 2019 Budget will not see the government reducing operational expenditures, but the development budget will definitely take a hit.
During a press conference after tabling the 11th Malaysia Plan’s mid-term review in Parliament today, he said that a lot of government revenue will be channelled to pay off the RM1 trillion national debt.
“The fact is that a lot of the money that we earn, the revenue must be used to pay the debts. So to that extent, we cannot reduce the operation budget. That has to go on.
“The only way to save money is to reduce the development budget,” said Dr Mahathir, adding that Finance Minister Lim Guan Eng has more details on the matter.
On another note, despite concerns over Malaysia being downgraded due to the revised 3 per cent budget deficit by 2020, Dr Mahathir said it is a “constraint” that the nation must face while trying to develop.
He admitted that the market will react, but the Pakatan Harapan (PH) government must remain focus on improving its economic standing due to the debts inherited from the previous administration.
“The market will react one way or another what we are trying to do is improve performance Malaysia economically and socially.
“If we leave things as they are the country will go downhill because what we inherited from the previous government is a lot of loans and more than RM1 trillion of borrowed money. Never in the history of
Malaysia has the government have a debt that large.
“We inherited it and we have to pay. That is the constraint we face, but even then we can do some development from whatever income we get,” he said.
Meanwhile, Economic Affairs Minister Datuk Seri Azmin Ali said in order to regain investor confidence, the government must be honest regarding its financial situation instead of covering things up under off budget expenses.
He promised that the PH government is committed to ensure economic growth even though it has to tighten some of its spending.
“The main pillar is about governance. I think this is crucial to be able to restore back investor confidence. I think once you manage to deal with it, I believe the investors will come back.
“Secondly, the prime minister has also embarked on some major institutional reforms like the MACC, Auditor General’s Office, the Attorney General’s Chambers... so these are the measures that need to be taken immediately so that you can restore the confidence of the business community.
“Within 100 days, we were able to conduct and embark this major reform and we have to move on from here based on the blueprint tabled by the prime minister today,” said Azmin.
Putrajaya has said in the revised Plan that it will further consolidate its operating expenditure to maintain a surplus current account balance by, among others, reforming government agencies, strengthening procurement process through open tenders, as well as restructuring debt.
It will also rationalise the ceiling amount for development expenditure from RM260 billion originally to RM220 billion during the Plan period, to consolidate the fiscal position — following lower revenue.
