Back in January, the official deficit projection for 2015 was revised up by the government to 3.2% of GDP from 3.0% due to the falling energy prices. I concluded then the new target was achievable if government revenue would increase by at least 1.2% YoY. It was a reasonable target eight or nine months ago. […]

I have been supportive of the government’s attempt at closing the deficit. I do celebrate the significant fiscal progress made over the past five or six years. In retrospect, it was easy to back the cuts because the times were generally good. After a recession in 2009, the Malaysian economy grew quite well almost every […]

The Malaysian federal government appears committed to cutting its fiscal deficit down to 3.0% of NGDP by 2015 (from 3.9% in 2013) and then balancing it by 2020. I think the 2015 target is achievable, especially with the GST coming in next year. As for the 2020 goal, that is far into the future to matter right now (in […]

This chart can be a bit confusing but it essentially shows the contribution of the four GDP components to Malaysia’s overall real GDP growth. This is exactly the reason why I said it was all government spending previously (okay, all is not exactly accurate. It was a significant contributor, if you like). You can see how […]

Malaysia’s GDP grew 4.3% YoY in the second quarter of 2013, slightly faster than 4.1% YoY in the previous quarter. While it is faster growth, I find the numbers worrying because if it was not for government spending, overall growth would have been much worse. Investment growth was down, private consumption was down and exports […]

I am curious at some of the projected fiscal deficit figures which have come out from the internet. A number of them are fanciful. One that I have read has the deficit under Pakatan Rakyat manifesto rising to close to 12% of nominal GDP while BN would be as low as 4%. The 4% figure […]

I do consider the payment of income tax as a responsibility I must fulfill. As a member of society, I have some responsibilities toward its maintenance. The fact that I am a citizen makes that responsibility of paying taxes doubly important. That responsibility arises from my enjoyment of multiple public goods that exist through public […]

Let us take for granted the assertion that a government cannot default on its debt obligation if all of its debts are denominated in the local currency. For the more macroeconomic inclined, if a country controls both its fiscal and monetary policies, it can never default on its debts. Taking the axiomatic approach notwithstanding the […]

There is a narrative going around in Malaysia that a government which has a majority of its debts denominated in a local currency can never default on its borrowings. For the purpose of clarity, it is the case where a national government has control over both its fiscal and monetary policy. I have trouble with […]

After reading a number of commentaries in the market, in the Malaysian econosphere and various research houses’ research papers, I became curious of the accuracy if government projection with respect to its finance. I was also curious at how serious I should take the government’s plan to cut its expenditure. So, here is part of […]

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