Malaysia's expects wider deficit

Jan 29, 2009
M'sia expects wider deficit

KUALA LUMPUR - MALAYSIA'S budget deficit will exceed the official forecast of 4.8 per cent of gross domestic product this year because of a new stimulus package to prop up growth, the finance minister said on Thursday.

The government will raise its fiscal deficit projection when it introduces the stimulus package soon and hopes to ensure the shortfall is not 'too high,' Finance Minister Najib Razak was quoted as saying by the national news agency, Bernama.

Economists expect the government to announce details of a second stimulus package worth up to 10 billion ringgit (S$4.18 billion). The government had said in November it would inject 7 billion ringgit into the economy this year to boost spending.

Mr Najib said more than 70 per cent of the 7 billion ringgit has been disbursed, largely toward construction and development projects involving low-cost homes, schools and other infrastructure.

The government expects 2009 economic growth to drop to 3.5 percent, from 5 percent last year. But most analysts say this forecast is too ambitious. -- AP