Archive for October 2011
Budget 2012 : The Possible Future of Public Debt
The public debt is the total amount owed by the Federal Government, both domestic and external. Since 1997 the Federal Government debt (public debt) has steadily increased. The latest figure for June 2011 places the debt at RM 437 billion.
Not only has the total debt been increasing, but the rate of growth has for the most part remained high. It crossed RM100 billion in 1998. It crossed 200 billion in 2004. It crossed 300 billion in 2008. It crossed 400 billion in 2010.
100 billion to 200 billion = 6 years
200 billion to 300 billion = 4 years
300 billion to 400 billion = 2 years
That is an exponential growth rate. The average growth rate from 2005 – 2010 was 10.6%/year. If the current growth rate holds steady at 10%, the public debt will cross RM 1 trillion by 2020.
This chart shows the size of the public debt from 1995 – 2020, based on an estimated growth rate of 10% per year from June 2011 onwards. This serves as an illustration of the possible future of the public debt based on recent trends.
While the debt ceiling ensures this will not happen easily, this chart should make it clear that recent trends are not sustainable for the future. Economic reforms are needed to drive up revenue, lower expenditure or both.
Ahmed Kamal
19th October 2011
If the public debt increases were largely due to development expenditure (true in most years) then it should ultimately be paid off by the revenue brought in by the development. But we have had larger increases in operating expenditure that have helped contribute to the debt. Our government has a tendency to increase operating expenditure hand-in-hand with revenue increases, if not through planned budget increases then via Supplementary Bills.
The most recent IMF forecast for 2016 estimates government revenue to be 293 billion, and the gross government debt to be 695 billion. This is lower than the 704 billion shown here. Nett debt would be smaller, lowest I can estimate based on IMF’s earlier figures is 670 billion. That is still higher than my 2015 estimate.
Data used in this graph:
Format : Year – Amount
Public Debt (RM million)
1995 – 91369
1996 – 89681
1997 – 89920
1998 – 103121
1999 – 112118
2000 – 125626
2001 – 145724
2002 – 164963
2003 – 188767
2004 – 216624
2005 – 228670
2006 – 242225
2007 – 266722
2008 – 306437
2009 – 362386
2010 – 407101
June 2011 – 437182
2012 – 480900.2
2013 – 528990.22
2014 – 581889.242
2015 – 640078.1662
2016 – 704085.9828
2017 – 774494.5811
2018 – 851944.0392
2019 – 937138.4431
2020 – 1030852.287
Budget 2012 : The Growth of Public Debt
The public debt is the total amount owed by the Federal Government, both domestic and external. Since 1997 the Federal Government debt (public debt) has steadily increased. The latest figure for June 2011 places the debt at RM 437 billion.
This chart shows the growth rate on a yearly basis from 1996 – June 2011. It is helpful for analysts to identify our worst and best years. From this it is easy
Not only has the total debt been increasing, but the rate of growth has for the most part remained high. It crossed RM100 billion in 1998. It crossed 200 billion in 2004. It crossed 300 billion in 2008. It crossed 400 billion in 2010.
In other words, the time taken for the debt to grow has been:
100 billion to 200 billion = 6 years
200 billion to 300 billion = 4 years
300 billion to 400 billion = 2 years
That is an exponential growth rate. The average growth rate from 2005 – 2010 was 10.6%/year. If the current growth rate holds steady at 10%, the public debt will cross RM 1 trillion by 2020.
Ahmed Kamal
19th October 2011
——
Data used in this graph:
Format – Year : Percentage change from previous year
1996 : -1.847453732
1997 : 0.266500151
1998 : 14.6808274
1999: 8.724702049
2000 : 12.04802084
2001 : 15.99828061
2002 : 13.20235514
2003 : 14.42990246
2004 : 14.75734636
2005 : 5.560787355
2006 : 5.927756155
2007 : 10.11332439
2008 : 14.89003532
2009 : 18.25791272
2010 : 12.33905283
June 2011 :7.389075438
Budget 2012: The Size of Public Debt
The public debt is the total amount owed by the Federal Government, both domestic and external. Since 1997 the Federal Government debt (public debt) has steadily increased. The latest figure for June 2011 places the debt at RM 437 billion.
Not only has the total debt been increasing, but the rate of growth has for the most part remained high. It crossed RM100 billion in 1998. It crossed 200 billion in 2004. It crossed 300 billion in 2008. It crossed 400 billion in 2010.
In other words, the time taken for the debt to grow has been:
100 billion to 200 billion = 6 years
200 billion to 300 billion = 4 years
300 billion to 400 billion = 2 years
That is an exponential growth rate. The average growth rate from 2005 – 2010 was 10.6%/year. If the current growth rate holds steady at 10%, the public debt will cross RM 1 trillion by 2020.
Ahmed Kamal
19th October 2011
(*) Domestic debt is debt owed to creditors within the country (citizens). Examples are treasury bills, securities (e.g. EPF), and other borrowings by the government.
(*) External debt is debt owed to creditors outside the country. Examples are external market loans in foreign currencies, and external bilateral and multilateral project loans.
——
Data used in this graph:
Format : Year – Amount
Domestic Debt (RM million)
1995 – 78038
1996 – 79211
1997 – 76968
1998 – 88197
1999 – 93750
2000 – 106805
2001 – 121396
2002 – 128680
2003 – 151483
2004 – 181970
2005 – 198670
2006 – 217220
2007 – 247120
2008 – 286121
2009 – 348600
2010 – 390356
June 2011 – 421016
External Debt (RM million)
1995 – 13331
1996 – 10470
1997 – 12952
1998 – 14924
1999 – 18368
2000 – 18821
2001 – 24328
2002 – 36283
2003 – 37284
2004 – 34654
2005 – 30000
2006 – 25005
2007 – 19602
2008 – 20316
2009 – 13786
2010 – 16745
June 2011 – 16166
How has the government managed the budget surplus in the last 16 years?
This graph shows the budget surplus trend as a percentage of GDP from 1996 – 2012. Since 1998 there has been a budget deficit.
A budget deficit occurs when the government spends more than it receives in revenue. Deficits are financed by borrowing, which increases public sector debt. This is not necessarily a bad thing, as government spending can help stimulate economic growth and benefit society through welfare, healthcare and measures dealing with job loss and owning property. This can become necessary during a recession.
In 2008/2009 there was a global recession and Malaysia experienced negative GDP growth and lower projected revenue. The export-focused manufacturing sector was the hardest hit. The government implemented stimulus packages (RM 67 billion) and other measures to help the economy. This brought the economy from a negative GDP growth of -1.6% in 2009 to a positive growth of 7.2% in 2010 (5.4% when compared to 2008 GDP figure).
Barisan Nasional has allocated RM 232.8 billion for Budget 2012, and aims to bring the deficit down to -4.7% of GDP.
Pakatan Rakyat has allocated RM 220.5 billion for Budget 2012, and aims to bring the deficit down to -4.4% of GDP.
Ahmed Kamal
12 October 2011
——
Figures used in this graph:
Format: Year – Deficit (% of GDP)
1996 : 0.7
1997 : 2.3
1998 : -1.8
1999 : -3.2
2000 : -5.8
2001 : -5.5
2002 : -5.6
2003 : -5.3
2004 : -4.3
2005 : -3.6
2006 : -3.3
2007 : -3.2
2008 : -4.8
2009 : -7.0
2010 : -5.6
2011 : -5.4
2012 : -4.7
Budget 2012 : Pakatan Rakyat vs Barisan Nasional (Spending Allocation)
This graph shows the allocation in spending in both budgets across 7 different areas.
Pakatan Rakyat (PR) allocated RM 220.5 billion.
The previous 2011 Budget was 213.9 billion.
The percentage gap in spending priorities is greatest in National and International Affairs, Education, Talent and Employment and Community Wellbeing.
Pakatan Rakyat’s spending priorities are:
1. Education, Talent and Employment (25%)
2. National and International Affairs (21%)
3. Economics and Finance (16%)
4. Community Wellbeing (15%)
5. Security (11%)
6. Agriculture and Regional Development (8%)
7. Infrastructure, Resource Management and Environment (4%)
Barisan Nasional’s spending priorities are:
1. National and International Affairs (26%)
2. Education, Talent and Employment (22%)
3. Economics and Finance (16%)
4. Community Wellbeing (12%)
5. Security (11%)
6. Agriculture and Regional Development (8%)
7. Infrastructure, Resource Management and Environment (5%)
Despite similar priorities and a 5.57% smaller budget, Pakatan Rakyat has allocated more spending than Barisan Nasional in the following areas:
1. Education, Talent and Employment (54.3 billion vs 51.4 billion)
2. Community Wellbeing (32.8 billion vs 28.1 billion)
This was achieved by reducing the allocation in other areas, primarily National and International Affairs.
Ahmed Kamal
11th October 2011
——
Government agencies for each area:
National and International Affairs
——
Tanggungan
Parlimen
Pejabat Penyimpan Mohor Besar Raja-Raja
Jabatan Audit
Suruhanjaya Pilihan Raya
Suruhanjaya Perkhidmatan Awam
Jabatan Perdana Menteri
Jabatan Perkhidmatan Awam
Jabatan Peguam Negara
Suruhanjaya Pencegahan Rasuah Malaysia (SPRM)
Kementerian Luar Negeri
Kementerian Wilayah Persekutuan dan Kesejahteraan Bandar
Suruhanjaya Perkhidmatan Pendidikan
Kementerian Penerangan, Komunikasi dan Kebudayaan
Simpanan Luar Jangka
Kementerian Pembangunan Usahawan dan Koperasi
Kementerian Perpaduan, Kebudayaan, Kesenian dan Warisan
Kementerian Hal Ehwal Dalam Negeri
Education, Talent and Employment
——
Kementerian Pelajaran
Kementerian Sumber Manusia
Kementerian Pengajian Tinggi
Economics and Finance
——
Kementerian Kewangan
Kementerian Perdagangan Antarabangsa dan Industri
Kementerian Perdagangan Dalam Koperasi dan Kepenggunaan
Kementerian Pelancongan
Community Wellbeing
——
Kementerian Pengangkutan
Kementerian Kesihatan
Kementerian Perumahan dan Kerajaan Tempatan
Kementerian Belia dan Sukan
Kementerian Pembangunan Wanita, Keluarga dan Masyarakat
Security
——
Kementerian Pertahanan
Kementerian Dalam Negeri
Agriculture and Regional Development
——
Kementerian Perusahaan Perladangan dan Komoditi
Kementerian Pertanian dan Industri Asas Tani
Kementerian Kemajuan Luar Bandar dan Wilayah
Infrastructure, Resource Management and Environment
——
Kementerian Sumber Asli dan Alam Sekitar
Kementerian Kerja Raya
Kementerian Tenaga, Teknologi Hijau dan Air
Kementerian Sains, Teknologi dan Inovasi
How does the Pakatan Rakyat Budget compare with the Barisan Nasional Budget for 2012?
This graph shows the trend in spending by the Barisan Nasional government across 7 different areas from 2008 – 2012. The dotted lines indicate how the budget would be spent if Pakatan Rakyat was in control of the Federal Government.
Barisan Nasional (BN) allocated RM 232.8 billion.
The gap in spending priorities is greatest in National and International Affairs, Education, Talent and Employment, Economics and Finance and Community Wellbeing.
Pakatan Rakyat focused spending on increased Education, Talent and Employment and Community Wellbeing and a 20% reduction on National and International Affairs.
Barisan Nasional focused spending on increased Economics and Finance, Agriculture and Regional Development and Infrastructure, Resource Management and Environment.
Ahmed Kamal
——
Government agencies for each area:
National and International Affairs
——
Tanggungan
Parlimen
Pejabat Penyimpan Mohor Besar Raja-Raja
Jabatan Audit
Suruhanjaya Pilihan Raya
Suruhanjaya Perkhidmatan Awam
Jabatan Perdana Menteri
Jabatan Perkhidmatan Awam
Jabatan Peguam Negara
Suruhanjaya Pencegahan Rasuah Malaysia (SPRM)
Kementerian Luar Negeri
Kementerian Wilayah Persekutuan dan Kesejahteraan Bandar
Suruhanjaya Perkhidmatan Pendidikan
Kementerian Penerangan, Komunikasi dan Kebudayaan
Simpanan Luar Jangka
Kementerian Pembangunan Usahawan dan Koperasi
Kementerian Perpaduan, Kebudayaan, Kesenian dan Warisan
Kementerian Hal Ehwal Dalam Negeri
Education, Talent and Employment
——
Kementerian Pelajaran
Kementerian Sumber Manusia
Kementerian Pengajian Tinggi
Economics and Finance
——
Kementerian Kewangan
Kementerian Perdagangan Antarabangsa dan Industri
Kementerian Perdagangan Dalam Koperasi dan Kepenggunaan
Kementerian Pelancongan
Community Wellbeing
——
Kementerian Pengangkutan
Kementerian Kesihatan
Kementerian Perumahan dan Kerajaan Tempatan
Kementerian Belia dan Sukan
Kementerian Pembangunan Wanita, Keluarga dan Masyarakat
Security
——
Kementerian Pertahanan
Kementerian Dalam Negeri
Agriculture and Regional Development
——
Kementerian Perusahaan Perladangan dan Komoditi
Kementerian Pertanian dan Industri Asas Tani
Kementerian Kemajuan Luar Bandar dan Wilayah
Infrastructure, Resource Management and Environment
——
Kementerian Sumber Asli dan Alam Sekitar
Kementerian Kerja Raya
Kementerian Tenaga, Teknologi Hijau dan Air
Kementerian Sains, Teknologi dan Inovasi
How have government spending priorities changed for 2012?
The 2012 Budget of RM 232.8 billion shows increased spending across most Federal government agencies. However, when compared with the 2011 Budget of RM 213.9 billion, it becomes apparent that some agencies received a reduced share of the budget despite an increase in spending.
For some allocations (e.g. Simpanan Luar Jangka/Contingencies Reserve) that is to be expected. But this visualisation helps analysts see which agencies experienced the biggest shifts in spending. It also serves to highlight any incongruity between the increases in dollar figures versus the proportional change in spending. Take Education and Security for example.
For Security, the total increase for the Ministry of Defence (Kementerian Pertahanan) and Ministry of Home Affairs (Kementerian Dalam Negeri) is RM 1.03 billion.
Looking at the dollar figures, it would seem that both spending areas have received substantial increases. While that is true, from the chart it is clear they have a lower priority.
How was this calculated?
For Education:
1) The Ministry of Education received an increase of 1.5 billion
2) The Ministry of Higher Education received an increase of 290 million.
3) The total increase is 1.8 billion.
4) In 2011 they took up 22.6% of the budget. For 2012 they have been given 21.55%.
5) Despite the increase of 1.8 billion, it’s a loss of -1.05% since 2011.
For Security:
1) The Ministry of Defence received a decrease of 108.9 million
2) The Ministry of Home Affairs received an increase of 1.1358 billion.
3) In 2011 they took up 10.92% of the budget. For 2012 they have been given 10.47%.
4) That is a loss of -0.45% since 2011.
5) Individually the Ministry of Defence has reduced -0.57%, whereas the Ministry of Home Affairs increased by 0.12%.
In summary, both areas have received a reduced share of the budget, and the allocation share for Education has reduced at a greater rate than the allocation for Security.
Ahmed Kamal
———
Summary of the figures used in this chart:
(Agency – % change from 2011 to 2012)
Kementerian Kewangan – 1.243464
Kementerian Wilayah Persekutuan dan Kesejahteraan Bandar – 0.652124
Kementerian Kerja Raya – 0.56324
Kementerian Pertanian dan Industri Asas Tani – 0.50238
Kementerian Perusahaan Perladangan dan Komoditi – 0.442796
Kementerian Tenaga, Teknologi Hijau dan Air – 0.285943
Kementerian Pembangunan Wanita, Keluarga dan Masyarakat – 0.262252
Kementerian Perdagangan Antarabangsa dan Industri – 0.176616
Kementerian Kesihatan – 0.13168
Kementerian Dalam Negeri – 0.127052
Kementerian Sumber Manusia – 0.08036
Jabatan Perkhidmatan Awam – 0.019177
Kementerian Pelancongan – 0.015936
Kementerian Luar Negeri – 0.009734
Pejabat Penyimpan Mohor Besar Raja-Raja – (0.000024375)
Suruhanjaya Perkhidmatan Pendidikan – (0.00045)
Jabatan Audit – (0.00089)
Parlimen – (0.00115)
Jabatan Peguam Negara – (0.0014)
Suruhanjaya Perkhidmatan Awam – (0.00149)
Suruhanjaya Pilihan Raya – (0.00156)
Suruhanjaya Pencegahan Rasuah Malaysia (SPRM) – (0.00378)
Kementerian Penerangan, Komunikasi dan Kebudayaan – (0.00384)
Kementerian Perumahan dan Kerajaan Tempatan – (0.02464)
Kementerian Sains, Teknologi dan Inovasi – (0.02704)
Kementerian Belia dan Sukan – (0.03375)
Kementerian Sumber Asli dan Alam Sekitar – (0.03676)
Kementerian Perdagangan Dalam Koperasi dan Kepenggunaan – (0.05891)
Simpanan Luar Jangka – (0.07565)
Kementerian Pengangkutan – (0.09692)
Kementerian Pengajian Tinggi – (0.35214)
Tanggungan – (0.41076)
Kementerian Kemajuan Luar Bandar dan Wilayah – (0.50461)
Kementerian Pertahanan – (0.56966)
Kementerian Pelajaran – (0.70084)
Jabatan Perdana Menteri – (1.60688)
