Najib's response shows gov't not serious about Fitch

  • Muslims not encouraged to use ‘RIP’, says National Fatwa Council
    Muslims not encouraged to use ‘RIP’, says National Fatwa Council

    Hours after the death of Karpal Singh, Muslims were told by the National Fatwa Council today they were not encouraged to use the phrase “Rest in Peace" (RIP) to a non-Muslim because the term had Christian connotations. In a statement issued on its website,, the National Fatwa Council said Muslims could express their... …

  • Amid furore over Karpal jibe, Perkasa distances itself from Zul Noordin
    Amid furore over Karpal jibe, Perkasa distances itself from Zul Noordin

    KUALA LUMPUR, April 17 — The right wing Malay group, Perkasa, has distanced itself from Datuk Zulkifli Noordin, who had earlier tweeted that the passing of veteran DAP politician Karpal Singh was... …

  • Legacy of the 'Tiger of Jelutong' will endure

    Karpal Singh's story may have come to an abrupt end this morning, but the author of his biography says the legacy of the 'Tiger of Jelutong' will endure in Malaysia, where he was a warrior in the fight for equality and justice. New Zealand journalist Tim Donoghue first met Karpal in Penang in 1987 and spent nearly 30 years researching the biography he wrote on the fearless lawyer and advocate, titled "Karpal Singh - Tiger of Jelutong", which was published in 2013. "I've done a few things in …

  • Soldiers injured as ceiling collapses during defence exhibition at PWTC
    Soldiers injured as ceiling collapses during defence exhibition at PWTC

    KUALA LUMPUR, April 17 — Two soldiers suffered minor injuries after the ceiling at one section of the Putra World Trade Centre (PWTC) collapsed today, on the last day of the 14th Defence Services... …

  • Penang to give Karpal official send-off

    The Penang government will provide veteran lawmaker Karpal Singh an official send off.   According to Chief Minister Lim Guan Eng, the Penang flag would be used to cover Karpal's cortege.   All state agencies will fly the Penang flags at half-mast for three days until the funeral on Sunday, said Lim.   He added that a public ceremony at the Dewan Sri Pinang will be held on Sunday from 9am to 11am for the public to pay their respects.    Lim said that the state exco had decided this during an …

  • Karpal to be given send-off with state honours
    Karpal to be given send-off with state honours

    After a lifetime of service to the country, the Penang government will acknowledge Karpal Singh's contributions by giving him a funeral with state honours. The Penang flag will be flown at half-mast until his funeral on Sunday. Chief Minister Lim Guan Eng said the flag would also drape Karpal's casket. "We can't accord a state funeral as... …

MP SPEAKS Najib Abdul Razak's immediate response to Fitch Ratings' revision of Malaysia's outlook to negative does not give confidence that the government views the matter seriously.

The prime minister tried to make light of the negative revision by pointing out that Fitch still "affirmed our rating". He said a negative element "is just the revision of our outlook but that depends on the move the government would make".

While Najib, who is also the Finance Minister, did highlight that "it is a concern that we share as a government and we would seek to address those concerns", the lack of gravity of the response does not give Malaysians and investors any comfort that real concrete actions will be undertaken.

It should be emphasised that this isn't the first "warning" by Fitch Ratings although it is the most serious action taken by the global ratings agency to date. In August 2012, Fitch has already warned that Malaysia's "fiscal trends may eventually lead to some form of negative rating action".

In November 2012, Fitch further reported that "Malaysia's public finances are a weakness relative to rating peers and offer limited scope for counter-cyclical fiscal stimulus at the current rating level... While this has not hindered the public sector's capacity to contribute to GDP, which grew 5.2 percent year-on-year in the third quarter according to Bank Negara Malaysia Friday, the growing is concerning."

Of biggest concern to Fitch then was "the increasing reliance on off-balance sheet funding could potentially call into question the meaningfulness of the 55 pecent of GDP federal debt ceiling."

The "off-balance-sheet funding refers to Malaysia's penchant to provide of guarantees to government-linked borrowers which does not officially count as federal government debt. In reality, if both official government debt and government guaranteed debt are put together, our debt to GDP ratio will be a much higher and worrying 68.9 percent, as opposed to the official 53.7 percent.

Hence despite the warnings given a year earlier, the Najib administration hasn't taken the necessary steps to correct the fiscal shortcomings in the federal government finances. Instead the reverse happened and As a result, Malaysia's issuance of off-balance sheet debt accelerated to 15.2 percent of GDP by end-2012 from 9 percent at end-2008. This is a drastic increase to nearly RM150 billion in 2012 from RM96.9 billion in 2010.

Failure of Najib's ETP

The above actually points to the failure of Najib's Economic Transformation Programme (ETP), where "Public Finance Reform" was one of the key 'Strategic Reform Initiatives' launched in 2010.

Among the key policies to be put in place are 'Expenditure Control' and 'Transparent Procurement'. The latter includes "eliminating incompetent suppliers/ service providers" and "value management". The ultimate objective was to reduce the government's budget deficit to 3 percent in 2015.

The outcome of the above initiatives however was for the government to channel development expenditure to off-budget measures, to paint a false perception of financial prudence. This is because the off balance sheet financing or contingent liabilities are not reflected as government debt and hence isn't included in the budget deficit calculations.

As an example, despite the RM50 billion MRT project being financed entirely by the government via debt instruments, not a single sen of the borrowings raised are considered official federal government debt despite the guarantees provided. Since such borrowings are excluded from deficit calculations, the official budget deficit figures give a false healthy picture of our public finances.

If the prime minister is really believes that the Fitch warning "is a concern that we share as a government and [the government] would seek to address those concerns", then the most important measure that he must agree to is to recognise all off-balance sheet loans and contingent liabilities as federal government debt in the upcoming Budget.

Only then Malaysians can see the true picture if the Najib administration has the political will to cut down our real budget deficit, instead of just providing a feel-good statistic that does not incorporate hidden debts. Najib does not reform the budgetary process, then we fear the ultimate consequence of not just a "negative outlook" but an actual downgrade of our sovereign ratings.

TONY PUA is the member of Parliament for Petaling Jaya Utara.

Follow @YahooMalaysia on LINE for daily news updates.

Comments on Yahoo pages are subject to our link to Comments Guidelines. You are responsible for any content that you post. Yahoo is not responsible or liable in any way for comments posted by its users. Yahoo does not in any way endorse or support comments made by its users.

  • ‘Huge’ Hindu, Buddhist statues against Islam, ex-judge says The Malay Mail Online
    ‘Huge’ Hindu, Buddhist statues against Islam, ex-judge says

    KUALA LUMPUR, April 16 — The “huge” statues at a Hindu temple in Batu Caves and Buddhist temple in Penang are an affront to Islam as the religion forbids idolatry, a retired Court of Appeals judge... …

  • My dad was in KL to see me, says Gobind The Malaysian Insider
    My dad was in KL to see me, says Gobind

    Bukit Gelugor MP Karpal Singh, who died in an accident early this morning, was in Kuala Lumpur to visit his son Gobind Singh Deo who was ill. A distraught Gobind said he was informed of the accident at 2.15am today, and he and his wife rushed to the scene where he saw his father's mangled car and his father's body. "My brother Ramkarpal was... …

  • Langkawi BN MP pokes fun at Karpal Singh’s remains The Malaysian Insider
    Langkawi BN MP pokes fun at Karpal Singh’s remains

    As the nation mourns the passing of a great politician, BN MP Datuk Nawawi Ahmad insulted the late Karpal Singh by posting a picture of the veteran politician's blood-smeared face as he lay in his Toyota Alphard following a tragic accident this morning. Along with the Facebook picture was a newspaper cutting on Karpal being opposed to the... …