With a RM290 billion debt hanging over its head and with continued overspending, the government is on a reckless path to self-destruction which could well eat into the people’s Employee Provident Fund (EPF) contributions.According to a research group although the country has been running on deficit since 1998, it has however not stopped the government from spending beyond its means.
The group pointed out that the government has overspent by RM290 billion in the past 13 years.
According to Research for Social Advancement (REFSA) executive director Teh Chi-Chang, the deficit could pave the way for more cuts in spending on other important areas such as education and healthcare.
“The last time we had a surplus or savings, where we spent less than our income was in 1998.
“By end of this year, our total over-spend would reach about RM290 billion.
“It means all Malaysians would be in debt by an average of RM10,000 each,” said Teh raising concerns over the impending content of the 2012 national budget.
Prime Minister Najib Tun Razak, who is also Finance Minister, would be tabling Budget 2012 come Oct 7.
Many quarters are expecting Najib to announce several goodies in the upcoming budget to cater for snap polls, rumoured to be held sometime late this year or in early 2012.
Barisan Nasional is said to be facing its toughest ever battle in its political history going into the 13th general election.
In the 2008 polls, the ruling coalition lost five states – Perak, Penang, Kedah, Kelantan and Selangor – to opposition Pakatan Rakyat.
BN later wrested Perak in a reverse takeover. In the recent April Sarawak state elections which was seen as a litmus test of approval, BN lost an unprecedented 16 seats, a clear indication according to analysts of fast dwindling popularity.
Going into the 13th GE, BN is expected to blow hundreds of millions to secure its grip on Putrajaya and such excess spending will mean more borrowings.
EPF funds under threat
Explaining the economic scenario, Teh said people should understand that when the government runs on deficit, it means having to borrow money to pay for the excess spending.
“And the lenders are normally the EPF, banks and fund managers,” said Teh.
He also said that as long as the government continues to borrow to pay for its dues, interest rates in the country would eventually soar.
Teh said with substantial amount of borrowing, there would come a time when lenders would be unwilling to lend anymore which would force government to cut its spending.
“Lenders may be forced to take ‘hair-cuts; that is accepting lesser payment than what is owned by the government.
“Imagine if the government can’t pay back its dues to EPF, the contributors will have lesser savings in their account,” said Teh.
The NGO then offered a solution to the government.
It urged the government to focus more on sustainability and balance in its budget rather than dishing out goodies and handouts in order to reduce spending.
Like an individual, Teh said, the government has finite amount of money at its disposal and must understand that in order to get more of something; the people must be prepared to receive less of something else.
“For example like last year, we spent RM50 billion for education, RM22 billion for defence and internal security, RM16 billion for healthcare and RM2 billion for housing.
“So is the mix right? Should we spend more on healthcare rather that defence or otherwise? These are the issues we must be deliberating on,” he said.