Four-point plan to handle ‘double whammy’ crisis

Non-partisan Crisis Committee, end corruption, stop wastage and opulent ways, tighten belts

PETALING JAYA: Opposition leader Anwar Ibrahim has outlined a four-point plan for dealing with the impending “double whammy” economic crisis, calling for a non-partisan National Crisis Committee of politicians and experts to handle matters.

Anwar said tougher times were ahead: crude oil prices had fallen by half so far; the ringgit was now the weakest in Asia besides the yen; palm oil prices were down 10%; and the share market had been the worst-performing in Asia last year.

With a revised Budget for 2015 due to be announced on Tuesday, Anwar urged the government to act swiftly, with four steps to be taken:

Tackle corruption and leakages: Pakatan Rakyat’s shadow budget had shown that a 15% cut in “leakages” could save almost RM20bn, or 1.6% of the projected gross domestic product;

Stop wastage and opulent and spendthrift ways, cloaked under shady procurement processes and opaque privatisation awards; stop hiding bad debts off the balance sheet;

Set up a National Crisis Committee of government and opposition MPs, economists, market experts and other specialists, which would also monitor daily commodity prices with authority to act;

Introduce austerity measures if oil prices fall lower, cut back mega projects while continuing to spend on critical areas such as healthcare, education and the humanitarian assistance for flood victims.

He said the ringgit had fallen at levels unseen since the Asian Financial crisis of 1997 (when he was then finance minister and fell out with Mahathir Mohamad over how best to handle the situation, finally being dismissed from the Cabinet).

The ringgit had lost almost 8.3% since October 2014, a drop almost double that of the Taiwanese dollar and the Singapore dollar.

There would be a shortfall of at least 8% or RM19.4bn of the estimated RM 242bn revenue projected in the 2015 budget. “Now that the oil prices have dropped by nearly half, what will be the actual impact on our revenue?” he said.

Savings from ending fuel subsidies would be wiped out, and if oil fell to US$40-US$50, the economy would be in deficit by 5%, or more if the ringgit weakens and palm oil prices fell further.

While the stock exchanges in Indonesia, Thailand and Singapore showed growth, Bursa Malaysia suffered significant declines, and foreign investors had fled ringgit bonds and equity, raising the cost of servicing government debt, which he projected was now 55% of GDP.

Noting that other countries were already on “alert mode”, Anwar urged the government to “step up to the plate”.