Malaysia's debt rises to RM407bil
PETALING JAYA: Malaysia's public debt level rose 12.3% to RM407.11bil in 2010 from RM362.39bil a year earlier, according to the Auditor-General's Report 2010. National debt grew 12% to RM390.36bil in 2010 from RM348.60bil a year earlier while foreign debt grew 21.5% to RM16.75bil from RM13.79bil in the previous corresponding period, said the report released yesterday. In 2010, unresolved public debt both at the national and foreign level grew by RM41.76bil and RM2.96bil respectively compared with 2009. “The national debt level totalling RM390.36bil accounts for 95.9% of the Federal Government's total debt,” auditor-general Tan Sri Ambrin Buang said in the report. He pointed out that the ratio of the Federal Government's debt to gross domestic product at the end of 2010 was 53.1%, which was over 50% for the second year in a row.
The national debt level is governed by various laws that impose a debt ceiling for the Government. Under Act 637 of the Loan (Local) Act 1959, and Act 275 of the Government Investment Act 1983, it is stated that the combined loans raised domestically should not exceed a ceiling of 55% of the nation's GDP. Meanwhile, Act 403 of the External Loans Act 1963 limits external loan exposure to RM35bil. The report also revealed that in 2010, the Government received revenue totalling RM159.65bil, which was an increase of RM1.01bil (0.6%) compared with RM158.64bil in 2009. Accounts receivable for 2010 stood at RM20.37bil while the Government approved allocation amounting to RM149.06bil for operating expenditure. “However, the said allocation was insufficient to cover the expenses amounting to RM151.63bil,” said the report. The report also revealed the implementation of a rating system based on an accountability index.
“Through this rating system, marks will be given for the compliance if regulations of six main elements in financial management, namely management controls, budgetary controls, receipt controls, expenditure controls, management of trust funds and deposits as well as management of assets and stores. “The federal ministries and departments rated as excellent become a role model and this would motivate others to diligently improve and enhance their financial management,” it said. (The Star)
Singapore: September inflation slows
Singapore inflation came in at 5.5% y-o-y in September, the Department of Statistics said, below the median forecast of 5.7% by Reuters. The central bank’s core inflation measure rose 2.1% y-o-y after rising 2.2% in August. On a m-o-m basis, core inflation was unchanged in September after gaining 0.4%. (StarBiz)
China: Manufacturing gauge rises as Japanese exports advance
China’s manufacturing may expand in October for the first time in four months, snapping the longest contraction since 2009, after a preliminary index of purchasing managers showed a rebound in new orders and output. The reading of 51.1 for the index was the highest in five months compares with the final reading of 49.9 for September and August. The Chinese report, along with Japanese data showing an increase in exports exceeding economists’ forecasts, signaled that Asia’s largest two economies are withstanding Europe’s sovereign debt crisis. (Bloomberg)
Japan: Exports increase more than expected, withstanding global slump signs
Japan’s exports rose more than expected last month, a sign shipments withstood weakening global growth before the yen climbed to a postwar high that prompted officials to pledge “decisive” steps today to stem its gains. Shipments increased 2.4% in September from a year earlier as demand for cars and auto parts rose, the Ministry of Finance said in Tokyo today. The median estimate of 26 economists surveyed by Bloomberg was for a 1% increase after a 2.8% gain in August. The nation posted a trade surplus of JPY300bn (USD3.9bn). (Bloomberg)
EU: Manufacturing, services shrink most since 2009
European services and manufacturing output contracted in October at the fastest pace in more than two years, adding to signs the region’s economy is edging toward a recession. A euro-area composite index based on a survey of purchasing managers in both industries fell to 47.2 from 49.1 in September. That’s the lowest since July 2009. The European Central Bank earlier this month resisted calls to lower interest rates, instead extending its use of unconventional tools, even as the economy is showing signs of a deepening slowdown. German investor confidence dropped to the lowest in almost three years this month. (Bloomberg)
The federal government had to use its cash pile to make up for the RM5.95bn shortfall in its 2010 expenditure and outlay, according to the 2010 Auditor-General’s Report released yesterday. For 2010, the federal government’s source of funds was RM519.99bn from tax and non-tax revenues (+0.6% to RM159.65bn from RM158.64bn in 2009), loans, receipts from capital, trust or deposits and public finance initiatives (PFI). However, RM525.93bn was incurred to fund operating expenditure (RM151.63bn vs, approved RM149.06bn in 2010), development (RM52.79bn vs. approved RM52.13bn), PFI expenditure, capital payments, payback on loans, trusts or deposits, resulting in a shortfall of RM5.95bn. The shortfall was made up by using cash, leaving the government with only RM21.57bn cash as at 31 Dec 2010, it said. Overall, nine ministries or departments have spent RM3.73bn more than the allocated amount, while additional allocations were passed by the Parliament on 3 Jun 11 to make up for the inadequacy. The AG’s report also uncovered weaknesses in spending under the five-year Ninth Malaysia Plna, when the Education and Defence ministries and the Treasury had overspent by RM2.57bn from the total original spending of RM44.47bn. The audit also found that 93 projects carried out by 20 ministries exceeded the estimates by RM6.16bn while another 19 projects by 11 ministries and departments exceeded estimates by RM1.07bn. (Financial Daily)
Government agencies have shown better financial management performance for the year 2010 compared to the previous year. In a statement during the presentation of the 2010 Auditor General's Report in the Dewan Rakyat yesterday, the National Audit Department said 357 government agencies were audited last year and 77 of them attained the four-star "very good" rating compared to only 48 out 399 given the same ranking in 2009. "The significant improvement signifies that the implementation of the Accountability Index (AI) proved to be an incentive to heads of departments and agencies to pay more attention to financial management," the department said. (Bernama)
The federal government has approved an allocation of RM194.7m for the rubber replanting programme and new rubber cultivation nationwide for the 2011-12 period. Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said from this amount, the Sabah Rubber Industry Board (SRIB) was allocated RM29m for rubber replanting on 2,000 hectares of land and new cultivation involving 5,000 hectares. He said RM112.7m was set aside for Risda for rubber replanting involving 24,000 hectares in the peninsula, 4,000 hectares in Sabah with the SRIB, and 10,000 hectares in Sarawak. (Bernama)
A US government mortgage relief program will expand to allow homeowners to refinance regardless of how much their houses have dropped in value, the regulator overseeing Fannie Mae and Freddie Mac announced. The Federal Housing Finance Agency also said it will eliminate certain fees and relieve banks of certain risks as part of the changes announced to the Home Affordable Refinance Program, or HARP. (Bloomberg)
US companies’ hiring plans reflect the worst employment outlook since Jan 10 as demand slows in the world’s largest economy, a private survey showed. Fewer companies project payrolls to rise in the next six months compared with a Jul survey, while more plan to cut workers, the National Association for Business Economics said. The share of firms planning to raise prices was the smallest in almost two years. (Bloomberg)
The Flash Markit Eurozone Services Purchasing Managers' Index (PMI) sank to 47.2 in Oct (48.8 in Sep). Economists forecast a reading of 48.5. (Reuters)
The euro zone's manufacturing PMI slipped to 47.3 in Oct from 48.5 in Sep, its lowest point since Jul 09. Economists expected a reading of 48.2. (Reuters, Bloomberg)
The eurozone composite PMI, a broader measure of private sector activity, also fell sharply, from 49.1 in Sep to 47.2 in Oct. (Reuters)
Eurozone orders rose 1.9% mom in Aug (-1.6% in Jul), the Eurostat said. Economists had forecast order growth to stall. On a yoy basis, orders jumped 6.2%. (Bloomberg)
Japan’s merchandise exports increased 2.4% yoy in Sep (+2.8% in Aug) as demand for cars and auto parts rose, the Ministry of Finance said. Economists forecast a 1% increase. The nation posted a trade surplus of ¥300bn (US$3.9bn). (Bloomberg)
Overseas investors are boosting holdings of Japanese short-term debt at a record pace as Europe’s fiscal crisis and signs of a slowdown in the US economy boost demand for the Asian nation’s assets as a haven. Money managers bought ¥14.8tr (US$194bn) more in money-market instruments than they sold in 2011 through Sep, set for the biggest-ever annual net purchases in data going back to 2005, according to Japan’s Ministry of Finance. (Bloomberg)
Thailand’s floods will affect the government's finances, increasing expenditure and depressing revenue, but are not expected to affect the Kingdom's creditworthiness, said Moody's Investors Service. (The Nation)
Thailand’s economic growth next year could reach 5-6% if manufacturing can make a full recovery in the next three to six months while the government accelerates rehabilitation of infrastructure and facilities for logistics. The National Economic and Social Development Board (NESDB) bases its highly optimistic view on the assumption that the government can speed up draining water from badly flooded industrial estates while also rebuilding roads and other facilities. (The Nation)
HSBC's flash purchasing managers' index (PMI) for China rose to 51.1 in Oct from Sep's final reading of 49.9 as new orders and new export orders expanded. (Reuters)
China’s current account surplus will fall to about 4% of GDP this year from a record high of about 10% in 2007 and 2008, central bank Governor Zhou Xiaochuan said. (Reuters)
Two more industrial estates in the Bangkok metropolitan area with a combined 344 factories were at risk of being inundated by the flooding in Thailand. The Labour Ministry estimates more than 650,000 employees are temporarily out of work. (Reuters)
Thai Deputy Prime Minister and Commerce Minister Kittirat Na-Ranong said industrial zones operators were expecting to reopen within 45 days of the water receding, but he was unable to give a timeframe for when that would happen. He said the government would need to create an industry relief fund of about THB100bn (US$3.2bn), and international financial institutions and a Japanese organisation had offered to contribute. (Reuters)
The United Nations is closely monitoring the potential for “serious food shortages” in parts of Southeast Asia after flooding devastated rice paddies. 7m tonnes of paddy may be lost from Thailand's main 2011/12 rice crop, which means total production could drop to 18m tonnes. Harvesting began in early October. 12.5% of rice farmland in Thailand has been damaged, along with 6% in the Philippines, 12% in Cambodia, 7.5% in Laos and 0.4% in Vietnam. (Bloomberg, Reuters)
The change in Indonesia’s consumer prices in Oct may +/-0.1% mom, Bank Indonesia Governor Darmin Nasution told reporters. (Bloomberg)
The Philippines’ budget deficit 9M11 was “way below program” Finance Secretary Cesar Purisima said today in Manila, without providing details. The government reported a budget deficit of PP34.5bn in 8M11 or about 15% of the level a year earlier. (Bloomberg)
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