KUALA LUMPUR, Sept 8 — Tun Dr Mahathir Mohamad’s advice for Putrajaya to tighten its belt has come too late, say Pakatan Rakyat (PR) MPs who predict a dire financial outlook for Malaysia unless the ruling Barisan Nasional (BN) government quickens its pace in carrying out comprehensive austerity measures.
It was because the former prime minister of 22 years was profligate with public money that the country is faced with government spending that’s potentially spiralling out of control, lawmakers from the three-party opposition pact said.
But they added there was no point in sniping at the 88-year-old now when the real issue at hand was for the present Najib administration to check financial wastage and monetary leaks to lower Malaysia’s sovereign debt, which now stands at an alarming 53 per cent of its gross domestic product (GDP), just slightly below the government’s self-imposed debt ceiling of 55 per cent.
“As much as I think much of the spending is inherited from his time, the real issue is the government’s spending going out of control,” PKR’s Rafizi Ramli told The Malay Mail Online.
He said the lack of seriousness shown by Datuk Seri Najib Razak as the sixth prime minister and finance minister in controlling public spending is the real problem.
“They continue to harp over and over again on one or two billion ringgit of subsidies (for fuel), but these are marginal subsidies compared to many other items such as power production.
“I think it’s dishonest. Fixing the financial problems in Malaysia need to be taken as a whole package, and it has to start with the personal commitment of the leadership to show they are serious in tackling wastages and leakages,” the Pandan MP said.
Dr Mahathir on Friday posted in his blog, chedet.cc, that the government must be more prudent with its spending and whatever financial assistance is doled out, such as the 1Malaysia People’s Assistance (BR1M), must be “properly budgeted for”.
He said cash aid programmes like BR1M should be done more selectively, and should not become a crutch like the public’s dependence on fuel subsidies.
Dr Mahathir, who also held the finance portfolio, added that the impact of the recent 20 sen reduction in RON95 and diesel subsidies would only contribute to between 1 and 5 per cent inflation to the price of goods and services.
Oil-producing Malaysia had last week hiked up the pump prices for the widely-used grade of fuel as part of the government’s subsidy rationalisation programme introduced soon after Najib came into office in 2009.
DAP’s political education director, Liew Chin Tong said the government should not shrug off its responsibility in shouldering the austerity burden, especially with many big-ticket items, such as corporate subsidies, still on the table.
“Any inflation or changes in prices, even at five per cent as Dr Mahathir claimed, would have a huge impact on the disposable income of ordinary folks.
“In the first place, the 20 sen increase shouldn’t have taken place before the subsidy to IPPs are removed and before the government checked on the multi-billion ringgit diesel smuggling trade,” the Kluang MP said, referring to the group of independent power producers by their initials.
“Those are areas worth far more than the revenue brought by the petrol hike,” he told The Malay Mail Online.
PAS central committee member Khalid Samad said the government cannot fall back on an overnight solution to deal with such a long-standing problem, while it shirks responsibility in dealing with the core issues affecting the country’s economy.
“The government should work on increasing the efficiency and transparency of the government, because all this affects inflation. If we carry on like this, the country will go down the drain. There’s a real danger of that happening,” the two-term Shah Alam MP said.
Last month, global ratings agency Fitch Ratings cut its outlook on Malaysia’s sovereign debt to “Negative”, citing gloomier prospects for reforms to tackle the country’s rising debt burden following a divisive election result this year.
The revision from a stable outlook adds to concerns over Malaysia’s high debt pile at a time when the currency has been pressured by bond fund outflows and there is talk of the US Federal Reserve ending its easy monetary policy.
In its downgrade, Fitch had singled out the lack of political fortitude to see through necessary reforms.
Even after Najib announced the fuel subsidy rationalisation, Fitch maintained its evaluation as it said the subsidy cuts were not sufficient to bring about substantial change to Malaysia’s financial outlook.
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