Inclusion of fiscal risk statement by World Bank in Malaysia's budget

The inclusion of a fiscal risk statement in the annual budget should help Malaysia plan for the medium term better, the World Bank’s senior economist for Malaysia, Dr Frederico Gil Sander, said.
He said Malaysia could follow the example of the Philippines, which follows the practice of having a fiscal risk statement. 

Other countries with such statements include all European Union member countries as well as most Organisation for Economic Cooperation and Development countries.
 
Gil Sander also said this statement would include a sensitivity analysis and forecast of oil prices as well as how such price movements would impact the budget. “This will help the Government plan in advance,” he said at the “Prospects for Global Oil Prices, World Trade and the Regional Outlook: Implications for the Private Sector” talk by the World Bank’s development prospects group director Dr Ayhan Kose.

Fiscal risk statements often include contingent liabilities such as the debt incurred by 1Malaysia Development Bhd, a state-controlled strategic investment firm.
He suggested the adoption of the statement as part of the tabling of the annual budget to Parliament.

Gil Sander said this would be a good time for Malaysia to implement the reforms aimed at lowering the fiscal deficit, as the country “is not facing a crisis”.
Malaysia recently revised Budget 2015, where gross domestic product growth was lowered to 4.5% to 5.5% from the 5% to 6% assumptions previously.
The deficit target was revised to 3.2% from 3% for this year. The country has targeted to bring down the deficit to 3.5% for 2014.
With the debt trajectory continuing to decline, Gil Sander said “the projections are realistic and the Government should be able to implement the measures from the budget”.