PUTRAJAYA, June 27 (NNN-BERNAMA) — The government’s ability to spend more especially on the people’s welfare programme have been hampered by financial constraints due to losses sustained from 1Malaysia Development Bhd (1MDB) and other related corruptions cases, said Malaysia’s Finance Minister Lim Guan Eng.
“The government would like to spend more but at the end of the day, legacy issues like 1MDB are still something we have to deal with. No country can lose RM150 billion without being hurt from it,” he said at the 2020 Budget Consultation meeting here today.
The government according to him hoped to achieve five per cent growth in the GDP this year, adding that it would take three years to get Malaysia back on track after suffering losses due to 1MDB debts.
On fiscal consolidation the government currently embarking on, Lim said Malaysia should be able to cut the fiscal deficit below three per cent of the Gross Domestic Product (GDP) by 2021.
The fiscal consolidation measures imposed by the government he said, has enabled it to reduce its fiscal deficit gradually from 3.7 per cent of the GDP in 2018 to 3.4 per cent this year before lowering it further to three per cent in 2020.
“The consolidation is necessary to preserve our high credit ratings of A3/A-. Nevertheless, Malaysia places a premium on economic growth and the consolidation is proceeding without sacrificing the wellbeing of the people,” he said.
Lim also said the government had not gone bankrupt, despite shouldering huge debts and could afford to pay the civil servants as well as carried out development projects to ensure sustainable annual growth.
The government according to the Finance Minister has also carried out various reforms such as introducing the Fiscal Responsibility Act and the Government Procurement Act to further enhance the credibility and accountability of public finances.
In addition, the government has also established the Debt Management Office to proactively manage the overall government debts and liabilities as well as undertake comprehensive assessment and reporting of fiscal risks exposure, he said.
“The government will be fulling converting to accrual-based accounting from cash-based accounting by 2021 to ensure more transparent disclosure of debt and liabilities as well as the value of assets,” added Lim.