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Thursday, October 31, 2013

Economist:Budget 2014 should ease credit rating agencies concern over M'sian public finances

Published: Monday October 28, 2013 MYT 12:00:00 AM 
Updated: Monday October 28, 2013 MYT 7:18:19 AM

SINGAPORE: The policies outlined in Budget 2014 are steps in the right direction and should ease the concerns of credit rating agencies over Malaysia’s public finances, said Kostas Panagiotou, Consulting Economist, IMA Asia.

“The smaller projected budget deficit of 3.5% of gross domestic product (GDP) from 4% in 2013, the abolition of sugar subsidy and the long-overdue introduction of the goods and services tax (GST) go some way in addressing these concerns,” he toldBernama when asked to share his views on Budget 2014 tabled by Prime Minister Datuk Seri Najib Tun Razak on Friday.

Panagiotou pointed the self-imposed 55% of GDP limit on public debt and the stated aim of a balanced budget by 2020 were useful signposts for monitoring the government’s fiscal performance.

He said the GST was a particularly important fiscal reform, as it would broaden the government’s revenue base away from its over dependence on oil and gas-derived revenues.

“The budget also includes appropriately offsetting measures for middle- and low-income households who may be hurt by the introduction of the GST. The budget tries to address the bubbly housing market in Kuala Lumpur and other Malaysian cities by lifting the real property gains tax rates and increasing the supply of low-cost housing for low-income families,” he said. — Bernama

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