DESPITE FEEL GOOD BUDGET, M'SIA NEEDS TO BE WATCHFUL OF INFLATION, SAYS

By Tengku Noor Shamsiah Tengku Abdullah
KUALA LUMPUR, Aug 30 (Bernama) -- Despite having presented a "feel good" 2009 Budget, which is expected to benefit most Malaysians, the government needs to be watchful of inflation and must continue to tackle the structural problems in the economy, says a leading economist.

Former deputy Bank Negara governor Lin See Yan warned that the
government cannot keep on running on a deficit budget.

"Inflation is not over yet and is now close to nine percent," he told
Bernama when commenting on the Budget 2009 tabled by Prime Minister Abdullah
Ahmad Badawi at the Dewan Rakyat here Friday.

The country's inflation accelerated to a 27-year high of 8.5 percent last
month after the government increased fuel prices to lower its subsidy costs as
crude oil surged.

Too much money in the system is expected to push the 2009 Budget deficit to
3.6 percent of gross domestic product in 2009 and 4.8 percent this year, higher
than the government's earlier forecast.

The Budget 2009 has been primarily aimed at measures to maintain the
well-being of Malaysians by seeking to strengthen the nation's economic
resilience to mitigate the adverse impact of an increasingly challenging
external environment.

"The government wants the people not to be too pessimistic and everybody
gets everything except the smoker, but this budget will be only a 'one-year feel
good budget' as the government has to monitor the inflation and tackle the
structural problems in the economy," he said.

For instance one structural problem that has to be looked into is the
development of more well trained police personnel, he said.

-- BERNAMA