Budget 2019 is too optimistic, says Najib

PARLIAMENT | Former prime minister Najib Abdul Razak said Budget 2019 is too optimistic and that a budget should be conservative and prudent to take into account any unwanted occurrences.

"When we are drafting the Budget, we should do so on the basis of prudence.

"We need to be prudent because we cannot take the best-case scenario. We need to be conservative.

"If the situation improves, then we get a bonus, but if the situation worsens, then we have already made preparations," Najib said in his speech during the Budget 2019 debate in the Dewan Rakyat today.

For example, he said, Budget 2019 assumes the average crude oil price will maintain at U$72 per barrel but as of yesterday, the average crude oil price had already dropped to around US$65 per barrel.

"This means that not even 10 days after Budget 2019 was tabled and its assumption is already not relevant.

"And so far it is only US$60. What if it goes down again? When I was the finance minister, it went down to US$28 per barrel.

"But because of our prudent policies, we did not suffer a financial crisis," Najib said.

Budget also too optimistic on GDP prediction

Budget 2019 is also too optimistic when it comes to its GDP prediction of 4.9 percent next year, he said.

He has not met a single analyst who has predicted next year's GDP to be as high as 4.9 percent, he said, as most of them said it will hover around four to 4.2 percent, or perhaps lower.

"What are the implications if we have an overly optimistic forecast? Actually, we should be prudent.

"We should put the forecast at four percent so that if we reach 4.5 percent, it would be an achievement," Najib said.

He also brought up concerns about the possibility of Malaysia's sovereign credit rating being downgraded after Petroliam Nasional Bhd's (Petronas) rating outlook was recently changed from stable to negative by Moody's Investors Service.

Petronas' credit ratings are better than the sovereign credit rating, he said, so the lowered outlook for Petronas could also mean that Malaysia's credit rating could also be facing a downgrade.

"Is this a precursor to a sovereign downgrade... because the credit rating for Petronas is higher than the national credit rating?

"I hope it won't happen but if it does happen, what are the implications?

"The government's cost for debt payment would increase significantly," Najib said.

Budget 2019 was tabled by Finance Minister Lim Guan Eng on Nov 2 and it is currently going through its second reading in the Dewan Rakyat. - Mkini

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