Husni mum on Indonesia’s concerns

KUALA LUMPUR: The Finance Ministry has remained mum on concerns raised by Indonesia over a spread of market disturbances from Malaysia to the region, despite Indonesia saying it will take steps to shield itself from the spread of such an occurrence.
According to a Reuters report on Wednesday, Indonesia’s Finance Minister Bambang Brodjonegoro said it is worried about the contagion effect and will seek to shield itself by improving market sentiment and using government borrowing to boost dollar inflows.
Finance Minister II Datuk Seri Ahmad Husni Hanadzlah said the fluctuating currency is not an isolated case but is the result of the appreciating US dollar and speculation on their interest rates.
“What we are facing basically is, commodity prices are lower, crude oil prices are also low. When we talk about currency depreciation, it is affecting every country. About 120 countries are being affected ... countries that are exporting commodities are badly affected,” he told reporters at the Youth Housing Scheme launch yesterday.
However, he declined to respond directly to his Indonesian counterpart’s comments.
On Budget 2016, Husni said it will be “slightly bigger” than Budget 2015 due to the implementation of the 11th Malaysia Plan (11MP).
“As far as the fiscal position is concerned, we will ensure that the principle of prudence will continue. We have measures to ensure that the fiscal position will be adhered to. One is our operating surplus that we will maintain. That means if we get operating surplus, we won’t be borrowing to pay operating expenditure. We only borrow to pay for development expenditure,” he said.
He said the government is confident of achieving the 3.2% fiscal deficit target this year and fiscal consolidation efforts will continue next year. It will also continue to ensure that the debt to GDP does not exceed 55%.
“When you talk about cutting expenditure, I don’t think so. The operating expenditure will be there. There will be a certain percentage of increase and then the development expenditure also will increase a bit. Operational budget will be increased to meet the requirement of the operating expenditure,” he added.
He said while the operating expenditure will be increased, the government will ensure that there is no wastage and that allocations for the various ministries are utilised prudently.
“Development expenditure will be higher next year compared with this year because it is the beginning of 11MP, which is very important because this 11MP will lead us towards Vision 2020. 11MP, by hook or by crook, we must ensure that it is successfully implemented.”
Budget 2016, which is being drafted now, will be presented to the Cabinet on Oct 7 and announced by the Prime Minister on Oct 23.
Early this year, the government reduced the allocation for Budget 2015 by RM5.5 billion from RM273.9 billion due to the slide in oil price. The fiscal deficit target was also adjusted from 3% to 3.2%.