Pak Lah uses budget speech to attack Anwar

KUALA LUMPUR, Malaysia - Malaysia’s government announced Friday wide-ranging aid for the poor and higher development spending in its 2009 budget aimed at shoring up its popularity amid spiraling inflation and political weakness.

Prime Minister Abdullah Ahmad Badawi, whose administration has been shaken by an election debacle and slowing economic growth this year, also used his annual budget speech in Parliament to mount a scathing attack on the revitalized opposition led by Anwar Ibrahim.

Anwar, who was sworn in as a lawmaker Thursday after winning a by-election, wants to unseat Abdullah by Sept. 16 through parliamentary defections. Anwar’s opposition alliance won an unprecedented 82 of Parliament’s 222 seats in March general elections - 30 short of a majority.

Abdullah warned that “efforts by certain parties to destabilize the country by attempting to seize power through illegitimate means and without the mandate of the people must be rejected.”

“I will not allow disturbances to continue. I will not permit the mandate given by the people to be seized” from the ruling party, he said.

In a clear reference to Anwar’s pledge to cut retail gasoline prices if he seizes power, Abdullah blasted his “populist claims.”

If implemented, they “would undermine the government’s financial position and bequeath a bankrupt nation to the next generation,” Abdullah said.

He announced a raft of public-friendly measures such as extending welfare aid to some 110,000 poor households, raising the threshold for taxable incomes to exempt 100,000 workers and handing higher pensions and bonuses to civil servants equivalent to a month’s salary.

Other goodies included large allocations to upgrade electricity, water and rural road facilities in two eastern states on Borneo island where government lawmakers are rumored to be considering defections to the opposition.

Anwar criticized Abdullah for giving an expansionary budget “in response to public frustration over rising inflation.”

“There are sweeteners here and there. But it fails to address some fundamental flaws in economic policy … issues of efficiency, endemic corruption and governance,” he said.

The Finance Ministry said in a report released separately that development expenditure is projected to rise to $15.2 billion in 2009, up 11.8 percent from $13.6 billion this year.

Development spending - a quarter of the 208 $62 billion budget - includes poverty reduction programs, educational training, health care and housing projects.

The Finance Ministry’s report said Malaysia’s economy is expected to expand by 5.7 percent this year and 5.4 percent in 2009, slowing from 6.3 percent growth in 2007.

The fiscal deficit was forecast to widen to 4.8 percent of gross domestic product in 2008 and 3.6 percent next year after achieving a low of 3.2 percent in 2007.

Fuel subsidies to keep the retail price of gasoline affordable are expected to soar by 142 percent on year to $5.3 billion this year, the ministry’s report said.

Inflation spiked to 8.5 percent in July, the highest level in decades, after the government hiked gasoline prices by 41 percent in June to slash the runaway subsidy bill. Officials rolled back gasoline prices 5.6 percent last week and said further cuts are likely to quell anger.

Home Minister Syed Hamid called it a “people’s budget.”

“It looks after those who need assistance most,” he said. “Everyone should be happy.”

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