Finance minister: RM19.6b supplementary budget won’t affect govt’s fiscal target

Finance Minister Lim Guan Eng speaks to reporters at the Parliament lobby April 2, 2019. — Picture by Ahmad Zamzahuri
Finance Minister Lim Guan Eng speaks to reporters at the Parliament lobby April 2, 2019. — Picture by Ahmad Zamzahuri

KUALA LUMPUR, April 2 — Finance Minister Lim Guan Eng today said the supplementary budget of RM19.6 billion will not affect the government’s fiscal target of 3.7 per cent for 2018 as it was part of the real expenditure for the year.

When tabling the second reading of the Supplementary Supply (2018) Bill 2019 at the Dewan Rakyat today, he said the fiscal target had already been achieved.

He said the estimated supplementary budget of RM19.6 billion comprises RM15.49 billion in development expenditure and RM4.13 billion for operating expenditure.

“As explained, RM6.3 billion is the previous government’s commitment that had not been provided an allocation and RM4.3 billion is for repayment of off-balance sheet items borrowed by the previous administration.

“The balance of RM9 billion is not an additional budget, but rather a reclassification of the expenditure, mainly from operating expenditure to development expenditure,” he said.

This includes RM2 billion for payment for Majlis Amanah Rakyat (MARA) students locally and overseas, RM1 billion to service Dana Infra loans as well as RM3.9 billion to service Private Finance Initiative (PFI) loans.

Besides the reclassification, he said RM1.9 billion was allocated for the transfer of surplus to Kumpulan Wang Pembangunan.

Lim pointed out that the real operating expenditure and development expenditure for 2018 amounted to RM289 billion compared to RM280 billion approved for the 2018 Estimated Federal Expenditure.

“It needs to be emphasised that the increase in expenditure of RM9 billion was due to the actions of the previous government and not the Pakatan Harapan administration,” he said.

He explained that due to the increase in expenditure, RM6 billion needed to be allocated to meet the expenditure commitments made by the previous government that were not budgeted for.

These commitments include the takeover of the Eastern Dispersal Link (EDL) in Johor worth RM1.4 billion after the previous government decided to abolish its toll at the end of 2017.

“In addition, various development projects were not given sufficient funding such as the Double Tracking Project under Keretapi Tanah Melayu Bhd (KTMB) worth RM1 billion, as well as RM0.5 billion in easy loan provision for highways and   RM0.4 billion for sewerage projects.

“The previous government also did not provide adequate allocation for operating expenditure despite there being contractual payments for services such as RM0.5 billion for hospital support services, RM0.3 billion for schools cleanup and security contracts, and RM100 million for the maintenance contract for Royal Malaysian Air Force (TUDM) aircraft,” he added.

Other than that, servicing off-balance sheet loans required an additional allocation of RM4 billion, he noted.

“Some quarters are alleging that the present government is spending more than the previous government, resulting in a higher deficit. The reality is that the budget deficit achieved in previous years did not reflect the real deficit.

“Part of the previous government’s expenditure was hidden by means of expenditure under off-balance sheet items. These loans had to be repaid by the government,” he said, citing the additional RM1.1 billion in payment for Private Finance Initiative (PFI) and an additional RM2.5 billion to service Dana Infra debts.

He added that in 2018, the Finance Ministry had assisted by paying 1Malaysia Development Bhd (1MDB) bonds and sukuk worth RM1.6 billion, stressing that even then, some quarters are saying that 1MDB has sufficient assets to repay its debts.

“The reality is that its assets are insufficient to repay more than RM30 billion of its debts,” Lim said. — Bernama

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