Husni: Budget 2013 takes into account global economic instability

IPOH: Budget 2013 is prepared against global economic instability, as it has taken various projections into account.

Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the ministry had made its own projections and included those by the World Bank and International Monetary Fund (IMF) on areas such as the increase in commodity prices.

“It is based on these projections that we have decided not to reduce our budget but focus on having operating surplus, reducing fiscal deficit and maintaining the debt-to-gross domestic product (GDP) ratio at below 55%,” he told reporters after presenting contributions yesterday to pilgrims who would be performing the haj.

“Reducing our budget will lower our country's growth, and any economic depreciation during that period will then affect the unemployment rates,” he added.

Ahmad Husni said countries such as the United States and those in Europe were experiencing slow growth, which has led to high unemployment rates.

On a separate matter, Ahmad Husni said plans by the US and Japan to carry out quantitative easing would not affect Malaysia as the country's capital market could absorb the increase in funds flowing in.

The method is an unconventional monetary policy that is used by central banks to stimulate the national economy when conventional monetary policy has become ineffective.

“Other countries with smaller capital markets will face problems as the funds will flow into other areas, such as investors buying more properties and creating a property bubble,” he said.

“The quantitative easing measures will also not affect Malaysia's inflation, although it could cause global food prices to increase.”

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