PUTRAJAYA: Lim Guan Eng has slammed the Nomura Global Research report stating that the country’s fiscal deficit would deteriorate from 3.7 to 3.9 per cent of the Gross Domestic Product (GDP).
Calling the report “entirely untrue”, the finance minister said this was because the nation’s fiscal position recovery plan over the next three years was going smoothly, without any disruption.
He said the government was confident of achieving a fiscal deficit of 3.7 per cent of the GDP for last year, and 3.4 per cent for this year.
“The plan is going smoothly and if it continues this way, then this will allow us to recover the country’s financial standing.
“So, what was reported by Nomura Global Research that the fiscal deficit would deteriorate to 3.9 per cent of the GDP is entirely untrue,” he told reporters.
Lim said the report was also wrong as the Sales and Service Tax (SST) collection had exceeded by 34 per cent the initial estimates in the last two months of the year.
“For November and December, the Finance Ministry had estimated a collection of RM4 billion, but the actual collection was 34 per cent higher, at RM5.4 billion. This gives us the confidence that the financial target and objectives set by the government will be achieved,” he said.
Lim said, apart from this, various restructuring initiatives announced by the government were being implemented, including the use of zero-based budgets to increase the efficiency of government spending this year, adding that this would have an immediate effect.
“Besides that, we have the implementation of a comprehensive open tender concept involving all ministries since last year, to increase transparency and effectiveness in government spending.
“(We also have the) migration to accrual accounting from cash accounting from 2021, also to increase transparency in public finances, as well as the formation of the Tax Renewal Committee and Public Finance Committee to diversify government revenue while at the same time continuing fiscal strengthening without reducing growth.
“More steps to restore the nation’s fiscal standing will be announced in 2020. All these developments will convince credit rating agencies such as Fitch ratings, Moody’s and S&P (Standard & Poor’s) that their decision to maintain Malaysia’s credit profile was the right one,” he said.
On Nomura Global Research’s concerns that the drop in global crude oil prices would have a negative effect on Malaysia’s fiscal standing, Lim said the country did not rely solely on revenue from petroleum products.
“If in 2009, the nation’s reliance on petroleum products stood at 41.3 per cent, this year it is down to 19.5 per cent.
“They (Nomura Global Research) also mentioned concern over the (supposed) political instability in the country. I want to stress here that the federal government is strong and solid, and the freedom of speech which has been given (to the people) is the most important indicator that the political situation in the country is stable,” he said.
Lim said the final decision and announcement of the sale of Samurai bonds would be made next week, and reports that claimed the bonds were already being sold by three banks were baseless.