Malaysians brace for austerity
- Published: 17 Sep 2013 at 10.43
- Online news:
Malaysian Prime Minister Najib Razak returned to power this year with the help of a spending spree that boosted consumption. Now voters could feel the pinch as he tries to appease a different group: rating companies.
Najib's government raised subsidised fuel prices for the first time since 2010 this month and has said it will delay some infrastructure projects, seeking to contain the budget gap and shore up the current account after Fitch Ratings cut Malaysia's credit outlook to negative in July. It is also considering a goods and services tax in the 2014 fiscal plan due Oct 25, 2013.
The government's spending restraint is aimed at maintaining confidence in Malaysia's fiscal outlook as capital outflows from emerging markets deliver particular trauma to countries like India and Indonesia, which are grappling with current-account deficits and budgets burdened with subsidy costs.
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