Malaysian PM reveals the 'mother of all budgets'
KUALA LUMPUR: Malaysian Prime Minister Najib Razak, under pressure to shore up his government's popularity, yesterday unveiled a budget aimed at winning votes in an election that must be held by August.
He unveiled plans to cut personal income tax for lower-income citizens, pay more to pensioners and spend billions on schools, hospitals and rural infrastructure to soothe voters unhappy with rising costs and widespread corruption.
New subsidies were also revealed on goods and transportation.
Malaysia's economy is in a significantly stronger position than a year ago, aided by higher oil prices and solid global demand for its exports.
This has allowed Mr Najib to propose populist steps and higher spending ahead of elections, but still target a lower fiscal deficit next year, of 2.8 per cent, from this year's 3 per cent.
The government will spend a total RM280.25 billion (S$90.6 billion) next year, up 7.5 per cent from this year's anticipated expenditure.
Spending will include RM6.5 billionon farmers, fishermen and rubber tappers, the largest allocation yet for the groups that are among key voters for Mr Najib's ruling Barisan Nasional coalition.
A one-time cash payment of RM1,500 was announced for civil servants and RM750 for government retirees.
Mr Najib also budgeted RM6.5 billion for rural infrastructure development and waived tolls from key highways in several cities. Big allocations were also made for road projects and schools.
Mr Najib, who is also finance minister, assigned RM6.8 billionfor an annual cash handout programme. He allocated RM3.9 billion for goods and transport subsidies and set aside RM2.2 billion to help home ownership under various programmes.
Income tax will be cut by 2 percentage points for Malaysians earning from RM20,000 to RM70,000 a year.
At the start of his speech, Mr Najib said it contained "happy news" to make everyone smile, and at the end, he said the budget "has made its mark as the mother of all budgets".
South-east Asia's third-largest economy expects full-year growth at 5.2 per cent to 5.7 per cent this year, rebounding strongly from 4.2 per cent last year.
Mr Najib said his administration remains committed to narrowing the fiscal deficit, saying: "What is important is government maintain fiscal consolidation target." - REUTERS