Should the Barisan Nasional government continue with its current spending habit and with the current annual loan rate of about RM50 billion, the country could land itself in some RM1 trillion of debts by 2020, said a think tank.
“In less than seven years, our Federal government more than doubled our debt burden from RM217 billion in 2004 to RM437 billion today. Put another way, the government has added on more debt in the six-and-a-half years since 2004 than in the 47 years following Merdeka,” said Research for Social Advancement or Refsa, in its latest focus paper discussing the 2012 Budget.
Scrutinising the 2012 Budget and Pakatan Rakyat’s shadow budget, Refsa opined that the handouts to the public as allocated in BN’s budget were easily dwarfed by mega projects.
“Besides Warisan Merdeka, there is nearly RM3 billion for school construction work, RM1 billion for the various corridors and RM420m to develop Langkawi.
“Borrowing is fine if it is spent effectively on productive pursuits. But our borrowings are ballooning beyond our repayment capability,” it warned.
It also rebutted BN’s projection of lowering deficit to 4.7 percent and stressed that the government’s budget was based on unrealistic foundations.
“2012 deficit likely to be closer to 6 percent. The government’s 4.7 percent budget deficit forecast is based on economic growth projections that are widely considered as over-optimistic,” it explained.
Refsa praised PR’s budget for making more “realistic economic assumptions”, saying it had clearer policies to raise disposable incomes and to address the rising cost of living.
“Pakatan has more conservative revenue and GDP assumptions. It plans to spend less than the government, but more effectively,” it said.