When Budget Figures Don't Tally

A Kadir Jasin

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LATEST UPDATE, Sept. 17

UPON closer scrutiny, the Finance Ministry’s press statement as quoted by The Star raised some very disturbing posers.

Comparing the various key figures in the Prime Minister’s budget speech and the Treasury Economic Reports for 2007/2008 and 2006/2007, the following facts and posers surfaced concerning the development allocation:

1. In his 2007 budget speech, the Prime Minister, who is also Finance Minister and Minister of Internal Security, gave the development expenditure as RM46.5 billion. The Treasury’s estimate was RM44.51 billion. In the 2007/2008 Treasury Report, that figure was revised downward to RM40.87 billion. (see Table 1);

Table 1: Source Treasury Economic Report 2007/08 (click to enlarge)

2. In short, the Treasury estimated the 2007 development expenditure to be RM44.51 billion. The Prime Minister raised it to RM46.5 billion in his budget presentation (see extract of PM’s 2007 budget speech). But it was finally revised to RM40.87 billion – a reduction of RM5.63 billion from what the PM had promised;

(Click to enlarge)

3. For 2008, the Treasury estimated the development expenditure to be RM40 billion – lower than in 2007. The Prime Minister promised RM48.1 billion in his budget speech – RM8.1 billion higher than the Treasury’s estimate;

4. Will this higher allocation be revised downward once again to be nearer or even lower than the Treasury’s estimate?;

5. This could happen should government want to meet the reduction in the budget deficit from 3.2 per cent in 2007 to 3.1 per cent in 2008 as outlined by the Prime Minister his budget speech;

6. The Treasury, in forecasting the 3.1 per cent deficit for 2008 was basing on the expenditure of RM40 billion;

7. Why was there such a big gap between the Treasury’s estimate, the Prime Minister’s promise and eventual expenditure for the current year?;

8. Is this a deliberate attempt at dressing up of the budget in the run-up to the general elections or is this a common budget practice?

All or some of these posers may not have been necessary should the Finance Ministry hold a press conference to clarify the matter raised in Parliament instead of merely issuing a press statement.

ORIGINAL POST

THE GOVERNMENT, according to a report in the The Star newspaper on Sept. 13, had given the assurance that the economic corridors that are being developed will not fall into the hands of foreigners.

It quoted the Prime Minister Abdullah Ahmad Badawi as telling the Parliament that the government “had made sure developments were planned and monitored by a supervisory body and other agencies such as Khazanah Nasional.”

“Although the Government encourages investments to help quicken the development in each Corridor, we will not let any of it fall into foreign hands,” he said.

He was replying to Salahuddin Ayub (PAS - Kubang Kerian) who asked about the fate of the corridors now that foreigners were aggressively investing in them.

These mega development regions may not fall into foreign hands but what about the companies and assets located in them?

It is recalled that after months of assurances (and denials in the mainstream media) that no Malaysian companies had fallen into foreign hands, Abdullah, on Aug. 28, 2006 acknowledged in Kepala Batas that Pantai Holdings Berhad had fallen into Singapore’s hand.

Two weeks earlier Abdullah had denied that Pantai Holdings Berhad had fallen into foreign hands.

The deal, which caused Pantai Holdings Berhad to fall into the hands of Singapore’s Parkway Holdings, was approved by the Treasury, Bank Negara and the Securities Commission – all under the Prime Minister’s control as Finance Minister.

The fiasco forced Khazanah Nasional to spend a huge sum of money to reacquire the company.

Thus Salahuddin and other concerned Malaysians have every reason to fear that more national assets would fall into foreign hands in the Prime Minister’s enthusiasm to launch his own brand of mega projects.

And why should they not worry when two keys documents relating to the recently presented 2008 Budget gave two very different figures for the same expenditure?

While Abdullah in his budget address gave the development expenditure as RM48.12 billion, the Treasury Economic Report put the amount at RM40 billion.

Opposition Leader Lim Kit Siang told reporters at the Parliament Lobby that “the additional RM8.12 billion will affect the budget deficit.”

How this happened could only be described as mystifying as both documents originated from the Finance Ministry and bore Abdullah's signature.

We cannot take these discrepancies lightly as they affect our interest while at the same time reflecting the lack of seriousness for truth and accuracy among our leaders and their key staff.

UPDATE Sept.15

Following is The Star report dated Sept.15 on the explanation by the Finance Ministry:

Finance Ministry clarifies figures in report

PETALING JAYA: The Finance Ministry has clarified that the 2008 Development Expenditure allocation (RM48.1bil) and estimated Development Expenditure (RM40bil) shown in the Economic Report are not contradictory figures in achieving the Government’s targeted fiscal deficit of 3.1% for next year.

A statement released by the ministry explained that the fiscal target was based on the estimated development expenditure, which represented the Government’s best estimate of actual expenditure in 2008.

At the same time, however, the Government was also proposing an allocation of RM48.1bil for 2008, the statement added.

“Typically, there is a shortfall when comparing estimated actual expenditure against the allocation sought for development expenditure.

“Having these two different numbers is not contradictory and does not in any way imply that the deficit target of 3.1% will not be met,” it said.

It was also exemplified that in the year 2007, the estimated development expenditure was RM40.9bil, while its allocation was RM46.5bil.

The statement further read that the RM40bil estimated for 2008 was consistent with the Ninth Malaysia Plan (9MP) ceiling of RM200bil (which translated to an average of RM40bil per year for the five-year plan).

“For the 9MP, whereby to accelerate implementation, large allocations are provided to facilitate the various implementing agencies to proceed with projects and programmes planned for the coming year.

“However, the actual progress on projects may not reach the planned stretched targets, resulting in an overall shortfall of actual expenditure.

“In this event, the Government has the sufficient flexibility to make the necessary adjustments to meet its targeted fiscal deficit,” it read.