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PM denies borrowing from abroad to fund development plan. The denial is probably prompted by the talks on the purported borrowing from abroad including this article published in MT.

PM denies borrowing from abroad to fund development plan

The EdgeDaily, 21 January - Malaysia will finance a US$54 billion (RM189 billion) development plan using internally generated funds, Prime Minister Datuk Seri Abdullah Ahmad Badawi said on Jan 19, denying rumours that the state borrowed funds from abroad for the plan.

"I don't remember taking any loan. I am the minister of finance. No, we have money," Abdullah told reporters when asked to comment on talk that the government had used a private firm to take a foreign loan.

"I know this question comes up because people are accusing us, that we do not have enough money. We have enough money. It will be implemented on the basis of the money being set aside."

Abdullah's government has been dogged by talk that it was short of funds after it scaled back spending on big-ticket infrastructure projects and scrapped a previous target to balance its budget.

But Abdullah has said the state was shifting spending from large projects such as ports and roads to focus on smaller projects such as building schools and improving rural infrastructure.

The government of former prime minister Tun Dr Mahathir Mohamad had previously pledged to cut the budget deficit to 1%-2% of GDP by 2005 and balance its books in 2006.

But Abdullah ditched that timetable after taking power in late 2003, calling it too aggressive. His administration has given no new timetable for balancing the budget.

Abdullah aims to reduce the fiscal deficit to 3.4% of gross domestic product in 2007 from 3.5% in 2006. The deficit was 3.8% in 2005.

International rating agencies have said Malaysia needs to do more to rein in its fiscal deficit to bring about a further upgrade in its sovereign rating. Reuters

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