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RM7 bil budget stimulus package adequate, says Nor Mohamed |
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Posted by admin
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Wednesday, 05 November 2008 22:39 |
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KUALA LUMPUR: The RM7 billion budget stimulus package is adequate to sustain economic growth during the current economic situation, Second Finance Minister Tan Sri Nor Mohamed Yakcop said today.
He said what was important right now was ensuring that the budget allocation was being spent efficiently.
According to Nor Mohamed, there is no need for the government to resort to borrowing abroad because of ample liquidity in the domestic financial system.
The government will be issuing bonds should there be a need for financing, he said, adding that the current deficit was at a manageable level.
“We have learn from the economic crisis in 1997/1998 that an expansionary budget is necessary during a period of economic downturn,” Nor Mohamed told reporters after the handover of cheque payments for the Micro Town Financial Programme under Amanah Ikhtiar Malaysia (AIM), a government agency entrusted to reduce the level of poverty through capital contributions to individuals.
According to him, the high savings rate in Malaysia at 37 percent will provide strong fundamentals for the financial system.
“However, as Malaysia is integrated into the global financial system, it cannot avoid the negative effect from other countries hit by the financial meltdown,” he said.
The stimulus package announced yesterday included projects that could create a multiplier effect on the economy, bolstering the economy on the backdrop of current challenges in the global economy, Nor Mohamed said.
“We do not anticipate a recession moving forward in 2009,” he said.
Asked whether falling crude oil prices will impact the government’s petroleum revenue, Nor Mohamed said it will not have a drastic effect on income next year.
“However, companies that are paying lower taxes due to impact from the global economic slowdown could have an impact on the government’s income,” he said.
Nor Mohamed said the government, determined to see a reduction in poverty, will encourage more financing schemes, particularly the micro credit schemes by AIM which amounted to RM532,000 and benefited 325 individuals.
He said AIM provided repayment schemes without the need for guarantors and security, and helped in nurturing more entrepreneurs.
On progress of the outstanding RM5.1 billion debt of Valuecap, a fund management company, Nor Mohamed said: “Whatever money the others have with Valuecap will be extended. EPF will provide a loan to Valuecap and that loan will be guaranteed by government.” “EPF will not take up a stake in Valuecap,” he said.
It was reported that the debt, due to mature in Febuary 2006 but later extended to Febuary 2009, was taken in March 2003.
Valuecap, created to invest specifically in the Malaysian equity market, is jointly owned by Khazanah Nasional Bhd, Permodalan Nasional Bhd and Kumpulan Wang Amanah Pencen.
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