Posted on 25 October 2013 - 08:56pm
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Datuk Seri Nazir Razak
Group chief executive
CIMB Group Holdings Bhd
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The government has correctly prioritised fiscal consolidation; restraining expenditure while being prudent with income expectations for 2014.
The financial markets will welcome the reaffirmation of the targeted 2013 and 2014 budget deficits of 4% and 3.5% of the gross domestic product (GDP) respectively.
We compliment the government for showing its resolve by going ahead with less popular measures such as the goods and services tax (GST) and higher real property gains tax (RPGT) to underpin fiscal consolidation over the medium term.
Despite these various measures the federal government debt is still forecast to rise to 54.8% by the end of 2013 and our current account surplus is expected to narrow further.
It is imperative therefore that in the near term the government manages its planned spend meticulously and is agile enough to adjust for unforeseen events in a potentially volatile global economic environment while for the longer term it stays firmly on the path of fiscal consolidation.
We expect global funds to be ever more discerning between countries based on the financial strength of governments.
We specifically welcome the government's initiative to improve operations of the derivatives market which will reduce credit risk and cost of hedging for banks and corporate, and incentives to increase savings for retirement by young Malaysians.
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