Wednesday, September 4, 2013

The numbers don’t tally, Mr Prime Minister

Harakahdaily,03 September 2013

News Analysis: Prime Minister Najib Razak has claimed that the 20 sen hike on RON95 and diesel would help the country to reduce its fiscal deficit.

He further claimed that the move would save the government RM1.1 billion in the remainder of 2013 and RM3.3 billion annuallyon the subsequent years.

Ok. He may be right.

But wait a minute.

To cushion the impact due to fuel price hike, Najib also announced that the cash payout for 1Malaysia People’s Aid (BR1M) would be increased in the Budget 2014.

However, he did not state how much it would be.

According to the figure provided by deputy Finance minister Ahmad Maslan last July in parliament, the government had spent a whopping RM2.9 billion for BR1M 2.0.

A total of 6.8 million recipients had received the cash aid, with 4.8 million receiving RM500 were those with household incomeof less than RM3,000 and another 2 million receiving RM250 were from the bachelors group earning less than RM2,000.  

As the finance minister, does Najib realise that giving BR1M actually cost more than what it can save from hiking the fuel prices?

At the old rate, BR1M would cost RM1.8 billion more than what it could save this year at RM1.1 billion.

Najib had promised to increase the cash payout.

Let's assume the government would pay RM600 for household earning less than RM3,000 and RM300 for bachelors; BR1M 3.0 would cost the government a whopping RM3.48 billion, slightly more than the RM3.3 billion saved from fuel subsidies.

Mathematically, this has expunged Najib’s claim that the fuel price hikewould help to reduce country’s fiscal deficit.

Now, how will the government recover the deep financial hole impact from their BR1M exercise?

Goods and services tax, electricity tariffs or new taxes? You name it. It seems like a people-unfriendly Budget 2014 is coming our way.

~ Harakah Daily

No comments: