KUALA LUMPUR, 6 March 2009: The government’s mini budget package could exceed the RM10 billion announced on 5 March as it had yet to include tax measures and other measures that are not financed by the government, economists said.
RHB Research said on today these include a lump sum payment of yearly dividend to employees from the Employees Provident Fund (EPF) or a reduction in employers’ contribution to the EPF, as speculated by the market.
“As a whole and including the tax measures, we believe the implementation of the second stimulus package will likely balloon the government’s budget deficit significantly to about 6.8% to 7.5% of GDP or RM49.5 billion to RM54.6 billion in 2009, from 4.8% projected previously and compared with 4.8% or RM35.6 billion recorded in 2008,” it said in a report.
On 5 March, the government announced that the RM10 billion would be divided equally between operating and development expenditure and was tabled by the Deputy Finance Minister under the Supplementary Supply (2009) Bill. Deputy Prime Minister Datuk Seri Najib Razak, is expected to provide more details of the stimulus plan on 10 March.
RHB Research said although the amount came in at the low end of its expectation of RM10 billion to RM15 billion, which comprises only the government spending and was lower than the recent report of RM20 billion to RM30 billion, “we believe it will likely be larger when the detail is announced”.
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This article first appeared on 6 March 2009 at www.theedgemalaysia.com under the title Mini-budget may be more than RM10b. Used with permission.