KUALA LUMPUR: Malaysia will not get into a twin-deficit situation (a growing budget deficit along with a current account deficit) as the country is well supported by its strong current account balance, said Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar yesterday.
The nation’s current account balance in the third quarter, which was announced last week, recorded a higher surplus of RM9.8 billion, compared with RM2.6 billion registered in the previous quarter.
“It was a one-time concern raised by a few economists as well as rating agencies, Fitch in particular.
“With this (strong current account balance), there should not be any fear about Malaysia getting into a twin-deficit situation,” he told reporters after delivering his keynote address at the Second National Statistics Conference 2013 here yesterday.
The current account balance in the first quarter of the year amounted to RM8.7 billion.
On a yearly basis, the current account surplus was up two per cent from RM9.7 billion in the same quarter of the preceeding year.
Abdul Wahid said the deficit targets of four per cent this year, 3.5 per cent in 2014 and three in 2015 are achievable if the revenue base is increased and broadened (via the Goods and Services Tax) and if expenditures are optimised.
He expressed confidence that the country’s economy will receive positive credit ratings from rating agencies given the strong gross domestic product performance in the third quarter of above the consensus estimate.
“We hope that over time, they will see enough evidence that we are actually moving in the right direction, so that they will eventually revise their outlook accordingly.
“In any case, why are we talking about the number three rating agency (Fitch Rating). I think (we should look at) the first two, S&P and Moody’s, they have our ratings on stable anywhere,” he explained. — Bernama