Investing infrastructure for the future

TO spend or not to spend on infrastructure bringing benefit to a country’s citizens, that is the dilemma of Governments facing slower economic growth and heavy debt burdens. In Malaysia’s case, growth as measured by gross domestic product (GDP) is likely to slow down further this year, and an indication of this was the cut to the benchmark overnight policy rate on July 13 with another rate-cut expected by a number of economists before the end of the year.

Weaker growth means lower revenue and that puts pressure on the Federal Government’s budget. The Government is struggling to balance the books and has a persistent fiscal deficit that is increasingly challenging to bring down given the low crude oil price and weaker tax revenue.