(Petaling Jaya, Friday): Deputy Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim announced a fourth 1998 budget in eight months to deal with the worst economic crisis in the nation's history when opening the annual assemblies of the UMNO Youth and UMNO Wanita yesterday.
He said the Cabinet has approved a RM7.031 billion "counter-cyclical" programme to kick-start the ailing economy after a negative growth of 1.8 per cent in the first quarter, which ignited fears of a recession.
He said that the Government would ensure that the additional allocation would have a positive effect on the economy and improve the livelihood of the people.
Efforts would be geared towards projects which could increase demand for local goods and services, increase the country's efficiency and competitiveness, and projects which substituted imports and increased exports. Projects which can be considered for implementation in the second half of this year and next year are in areas of agriculture, low- and medium-cost housing, schools, expansion of skills training centres and institutions of higher learning, clinics, bridges and rural roads, water supply system and infrastructure.
The counter-cyclical economic programme announced by Anwar yesterday is similar in strategy to that Malaysia first employed when recession struck in the mid-80s.
The question is whether a counter-cyclical programme which did not work in fighting recession in the mid-80s could work this time in fighting recession in the late 90s.
Anwar had not disclosed the source of funding for the RM7 billion plan. In the 1998 Malaysian budget presented in October last year, Anwar had allocated an expenditure of RM64.1 billion but the federal government's budget was slashed by 18 per cent or RM11.5 billion in the second 1998 budget in early December.
One possible source for the RM7 billion counter-cyclical programme is the World Bank, which is expected to approve a US$300 million loan to Malaysia to stimulate the country's economy and another US$700 million loan from World Bank is expected at the end of the year.
Malaysia would have another US$1 billion or about RM4 billion to fight the looming recession if the government had practised the important principle that "charity must start at home" and withdrawn the US$1 billion loan to Indonesia, and DAP calls on the Cabinet to make a formal decision that Malaysia is in no position to aid other countries when we are ourselves in deep trouble.
The market had reacted favourably to the fourth 1998 budget. It was reported that Malaysian stocks surged during Mr Anwar's speech, with the benchmark 100-stock Composite Index rising as much as 6 per cent before ending the day up 4.6 per cent -- or 20.94 points -- at 471.82. The Malaysian ringgit also rebounded yesterday against the US dollar ending the day at 3.9525/625 from 4.0550/750 on Wednesday.
However, such favourable market reactions to the second 1998 Budget
last December and the third 1998 Budget in March had proved short-lived,
as the government had not been able to sustain confidence. On the contrary,
confidence plunged to new depths because of the "denial syndrome"
of the government in stubbornly refusing to accept the critical importance
of wide-ranging political, economic and financial reforms.
The fourth 1998 budget of RM7 billion to jumpstart the economy may not have the full effect to stimulate the economy and fight off a recession without far-reaching political, economic and financial reforms, such as a full-hearted war against corruption, cronyism and nepotism.
Anwar's fourth 1998 Budget should be presented to Parliament to allow for a full debate on the government's stewardship of the past one year of the economic crisis, so that there could be a full inquest as to why there is still no light at the end of the tunnel although in January this year, the Prime Minister, Datuk Seri Dr. Mahathir Mohamad had forecast economic recovery within six months to a year and the MCA President and Transport Minister, Datuk Seri Dr. Ling Liong Sik had predicted economic recovery in three months, i.e. by April 1998, which has come and gone, with the economy still to see the worst of the crisis.