KUALA LUMPUR, Nov 4 - Finance Minister Datuk Seri Najib Razak revised the 2009 Budget today, presenting additional steps such as a RM7 billion injection into the economy as a "policy response" to deal with the global financial crisis.
Besides the RM7 billion injection, which is the savings from fuel subsidies, he also revised downwards the country's gross domestic product (GDP) growth forecast.
"This is to ensure Malaysia's economy continues to grow and the rakyat do not come under too much pressure," he said in Parliament today when announcing the new measures.
The revision brings forecasted GDP growth down to 3.5 per cent from 5.4 per cent and the budget deficit upwards to 4.8 per cent from 3.6 per cent.
This is due to changes in estimated revenue from RM176.22 billion to RM168.73 while expenditure remained the same.
With this, the Deputy Prime Minister crushed the opposition's hope to have the budget retabled. Najib also insisted that the government was "not in denial."
"Even though Malaysia is not directly experiencing a financial crisis and has strong financial fundamentals, we are aware that Malaysia is not exempt or sheltered from the risks of challenging global developments," he said.
He backed this up by stating that the national reserve was still healthy at 37 per cent of GDP with only 2.5 per cent non-performing loans and a risk weighted capital-adequacy ratio of just 13.2 per cent, above the international standard of 8 per cent.
Najib also said the government will proceed with the proposal to inject RM5 billion into ValueCap via a loan from the Employees Provident Fund (EPF) to purchase undervalued stocks.
He insisted that the funds would be guaranteed by the government and the returns from the loan would be higher than the prevailing interest rate but with minimum risk.
The DPM said this was to stimulate activity in the capital market and it was not compulsory for ValueCap to invest only in GLCs. He added that this move had precedents in Hong Kong's Tracker Fund during the 1998 economic crisis and also recent measures taken by the Qatar Investment Authority.
Najib also called the revised budget an expansionary one, stressing that priority would be given to projects with a high multiplier effect, citing as an example the shelving of the RM1.6 billion purchase of Eurocopter helicopters by the Ministry of Defence.
"The government has the flexibility to execute additional high impact projects due to savings from fuel subsidies. From these savings, the government will execute various initiatives involving an injection of RM7 billion," he announced.
The Bill was passed unanimously and now moves on to the committee stage.
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There you go, a lousy Prime minister in waiting.