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NEWS UPDATES Asean Affairs   30 October 2013  

Malaysia's proposed fiscal reforms credit positive step: Moody’s

Moody's Investors Service says that Malaysia's (A3 stable) proposed 2014 budget with its call for fiscal consolidation and reform of the country's subsidy system would, if fully implemented, be credit positive for the government's finances.

At the same time, Moody's says that structural fiscal weaknesses will remain, and execution risks will present challenges to the effectiveness of the government's fiscal policy strategy.

Specifically, the budget calls for a reduction in the fiscal deficit to 3.5 percent of GDP in 2014, lower than the government's estimate of 4.0 percent in 2013. Yet the budget deficit will remain wider than it was in the years immediately before the 2008 global financial crisis.

Moody's notes that expenditure restraint will be the primary driver of the planned reduction in the deficit in 2014 rather than growth in revenue. Notably, development expenditures are set to fall for a second consecutive year; a development that will negatively impact GDP growth in 2014.

A key feature of the budget is the 15.6 percent cut in the total subsidy bill in 2014 from 2013. However, subsidy expenditure in the budget will remain elevated when compared with the historical level prevalent before the commodity price boom and the global financial crisis in 2008.

Moody's notes that the cutback in subsidy spending is driven in part by the September increase of 20 ringgit per liter in diesel and low-grade gasoline prices. However, this increase alone will not likely be enough to achieve the intended reduction in fuel subsidies in 2014. Prime Minister Najib Tun Razak unveiled his budget proposal on Oct. 25.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






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