KUALA LUMPUR (Jan 20): Putrajaya's budget revision is a "sore disappointment" as it does not tackle the weakening ringgit caused by plunging global oil prices, which have now hit US$48 per barrel, said PKR.
It also did not contain any revision of the RM7 billion allocated as the Prime Minister's Department discretionary budget, said the party's secretary-general Rafizi Ramli today.
Instead, the move to save RM400 million by deferring the National Service Training Programme (PLKN) this year was "too minute" and not going to help the country much, he said.
The real threat to Malaysia, Rafizi said, was the weak ringgit as a result of the drop in crude oil prices.
"It is worrying that we have a prime minister who makes an announcement that the country is not facing a crisis," he said, in reference to Datuk Seri Najib Razak's speech this morning that the government is taking preemptive measures following changes to the global economy.
"I wonder if he understands the magnitude and gravity of the ringgit inching towards RM3.70 to the US dollar.
"If he's in denial, obviously his response today does not reflect the political will and urgency to tackle the issue of the plummeting ringgit," he said at a press conference at the PKR headquarters.
He warned that the ringgit, currently at a five-year low of RM3.60 against the US dollar, could further plummet to RM3.70 in the next few months, the same rate as during the 1997/1998 Asian financial crisis.
He said the savings of RM400 million is just "slashing for the sake of slashing without any real purpose", pointing out that it does not have any real impact on the government's financial position.
"RM400 million is basically the cost of two private jets, Najib can just sell off the two government planes for RM400 million," he said.
The Pandan MP expressed his disappointment over the lack of action by Putrajaya to tackle its financial position in the revised budget, which he pointed out will have massive impact on the economy and the government's expenditure.
Inflation, he added, will spike especially since the country imports a lot of food.
Between 2002 and 2012, Malaysia spent RM221.81 billion, or an average of RM22 billion annually, to import foodstuff like cocoa, fruits, vegetables, wheat, dairy products and meat.
He said Najib also failed to address concerns over the country's financial stability as a result of his high debts.
Malaysia has one of Asia's highest debt-to-GDP ratio at 52.8%, a shade below the self-imposed limit of 55%, while its household debt is at 86.8% of the GDP, which is ranked as second highest in Asia.
Economists had warned that the country was vulnerable to external shocks as foreign investors held 47% of government bonds.
"All the announcements were related to very small public related issues and do not address core fundamental economic issues such as the plunging ringgit, the government's excessive spending and the consequences of our income slashed as a result of falling oil prices.
"There's no excitement from this. In fact, it is worrying because he is either avoiding the question or he did not have answers on how to manage this," said Rafizi.
Earlier this morning, Najib had announced a slew of budget cuts amounting to RM5.5 billion as part of Putrajaya’s “proactive measures” to align itself with plunging global oil prices and revised world economic growth projections.
The cuts would come from the Budget 2015’s operational expenditures that were initially set at RM223.4 billion, while the RM48.5 billion for development would remain untouched, Najib said in his speech at the Putrajaya International Convention Centre.
Also, the fiscal deficit target of 3% of the Gross Domestic Product (GDP) for the year has been revised to 3.2%.