Malaysia sees 2008 budget deficit at 3.1pc of GDP

MALAYSIA is confident of meeting its target of shrinking its budget deficit to 3.1 per cent of GDP in 2008, the country's Second Finance Minister said in an interview on state television today.Malaysia is trying to reduce its deficit while subsidising fuel and food prices to keep them affordable. The deficit was officially forecast at 3.2 per cent last year, compared with 3.3 per cent of GDP in 2006."We need to be disciplined," Tan Sri Nor Mohamed Yakcop told RTM1, adding that government subsidies for education, fuel, and health care amounted to RM81 billion.He added: "Even with this RM81 billion subsidy, we were still able to reduce the deficit from 5.5 per cent in 2000 to 3.2 per cent in 2007 and we are confident we can reduce the deficit even further to 3.1 per cent this year," he added.Malaysia wants to restructure subsidies so that only the poor benefit from them, but the government has given no details yet.Nor Mohamed has earlier said Malaysia expected to fork out RM35 billion in fuel subsidies this year if crude oil continued to hover near US$100 a barrel.Malaysia is a net oil exporter and its oil revenue has soared with the rising price of crude, but it spends US$4.5 billion a year on fuel subsidies - about a tenth of total government revenue in 2007 - to keep pump prices among the lowest in Asia.The minister also said that Bursa Malaysia can advance and breach the 1,700 points level by the end of this year based on continued foreign investor support and confidence in the market.The stock market would always continue to mirror conditions in the market such as political stability, the country’s macro economic conditions plus its financial standing, which has been the case in Malaysia, he told reporters after the “Selamat Pagi Malaysia” talk show over RTM1.The Kuala Lumpur Composite Index, which touched a high of 1,516.22 points on January 11, is trading at an average of 1,400 points.This means that the KLCI can climb by 21 per cent. - Reuters, Bernama