KUALA LUMPUR, Feb 26 (Reuters) – Malaysia will need a bigger fiscal boost than its existing 7 billion ringgit ($1.9 billion) stimulus package in a mini-budget set for March 10, the country’s deputy prime minister said on Thursday.
“In view of the weakening and deepening external crisis the stimulus package will have to be bigger and more comprehensive,” Najib Razak told reporters on the fringes of a conference.
“Resources and budget deficit have to be taken into account,” said Najib, who is also finance minister.
Najib, who will become prime minister on March 31, refused to specify how large the package would be.
The first measures to help boost domestic demand, a 7 billion ringgit package which reallocated spending from fuel subsidies, has been criticised as too little as it was just 1.1 percent of gross domestic product and too slow to disburse.
Until recently, the second spending plan was seen by economists as being worth some 7-10 billion ringgit, but with demand shrinking globally, some economists are calling for a bigger boost due to shrinking exports.
“For the whole of 2009, we see growing risks of exports and imports contracting by 28 percent and 23 percent, resulting in a reduced current surplus of 50 billion ringgit versus 117 billion ringgit in 2008,” investment bank AmResearch said in a report on Thursday.
The bank said the country needed economic stimulus of more than 30 billion ringgit and include policies such as cash bonuses and vouchers to increase retail sales as well as high-impact projects, and aim at the right segments of the population, such as the middle-income group.
Source : Reuters