Revised Bajet 2015: We won't see twin deficits, says Wahid Omar:

AWO's 1-2-3 on the revised 2015 National Budget/What you can do to help the nation 

Jan 21: If the PM's looking for a Finance Minister, he need not see beyond Abdul Wahid Omar: the dude is straight (as in frank and honest), bijak bistari (which is more than pandai or mere clever) and incorruptible (just ask your corporate player friend). His take on the Bajet revision and consequent economic outlook for the year is cautious but confidence. Reassuring, Sure.
We need that, I'm sure you'd agree.

I quote the Minister in the Prime Minister's Department verbatim:

Assalamualaikum ... here's my '1-2-3' take on PM's announcement on the state of the economy : 

1) The drop in oil price from USD100/barrel to USD55 (expected average for 2015) will result in net reduction in Govt revenue of RM8.3b . 

This means without new measures, our fiscal deficit will widen to 3.9% from the 3.0% budgeted in 2015. 

With new measures, we expect revised fiscal deficit of 3.2% which is still credible as it is lower than the 3.5% deficit for 2014 and in line with our Fiscal Reform & Consolidation strategy.

2) Lower oil price is generally good for the global economy with The World Bank suggesting a positive impact of 0.5% improvement to global GDP growth. 

However, for net oil & gas exporting countries like Malaysia, the impact will be negative despite taking into account the favourable impact on increased demand for Malaysia's manufactured goods & services, improved tourism proceeds & lower cost of production. 

Accordingly we have revised our 2015 GDP growth forecast downwards by from 5%-6% to 4.5%-5.5% . 

Such growth rate is still credible considering it is still much higher than The World Bank's global GDP growth forecast of 3.0% . 

3) Another aspect of the economy closely tracked by analysts is whether Malaysia will experience a current account deficit in our Balance of Payments. 

In 2013, Malaysia recorded current account surplus of RM37b (3.9% of GDP). 

This is expected to improve to some RM50b (5% of GDP) in 2014. 

The drop in oil price will be partially mitigated by, among others, higher exports of manufactured goods. 

Therefore we are still expected to record a current account surplus in 2015 albeit lower at 2-3% of GDP. 

We are therefore not expected to experience a twin deficit situation as feared by some analysts. 

So overall, Malaysia has taken the right steps to review our economic & fiscal position and outlined the necessary strategies & proactive measures to keep the economy growing in 2015 at a respectable rate of 4.5-5.5%, continue with fiscal reform & consolidation with an acceptable fiscal deficit of 3.2%, sustain a current account surplus position and maintain development expenditure budget of RM48.5b for benefit the people. 

What can you do to help this beloved country of ours? 

1) Live within your means. Optimise your expenditure. Keep spending if you can afford it.  Dont borrow if you dont have the capacity to repay. 

2) Invest domestically. With the strong dollar, defer your overseas investments. In fact, this is probably a good time to bring back your monies from abroad to realise some gains. 

3) Think positive. These are challenging times. But we are clear on what we need to do to ride through this period of market volatility. Just follow through & do the right things. InsyaAllah, God willing, we will succeed.