The government is unlikely to cut tax rates due to the RM1 trillion debt and liabilities as well as lower revenue collection from SST.
KUALA LUMPUR: Budget 2019 will see a cut in the development budget as the government cannot afford to reduce operational expenditures, says Tun Dr Mahathir Mohamad.
The Prime Minister said a lot of the government revenue must be used to pay off the mounting national debt, which has reached more than RM1tril.
"The fact is that a lot of the money we earn must be used to pay the debts so to that extent, we cannot reduce the operational budget.
"The only way to save money is by reducing the development budget," he told reporters at the Parliament lobby on Thursday (Oct 18).
He added that Finance Minister Lim Guan Eng would have more details on this.
Dr Mahathir also said that the government is expecting a lower gross domestic product (GDP) growth next year, with the target set between 4.5% and 4.9% growth.
This is lower than previous figures under the former government, he said, and explained that this was because the figures by the former administration did not take into account "off-budget" spending.
"It's lower than previously but their figures were not correct because the figures didn't take into consideration what they call 'off-budget' budgeting.
"Whatever they don't like, they put it off-budget. They borrowed RM42bil off-budget and that now has been inherited by the government," said the Prime Minister, referring to the debt by troubled state-owned investment arm 1Malaysia Development Berhad (1MDB).
To a question on whether he is worried about Malaysia being downgraded by ratings agencies due to the revised 3% budget deficit by 2020, Dr Mahathir said the government is facing this challenge while trying to develop the nation.
"Well the market will react one way or another, what we are trying to do is improve the performance of Malaysia politically, economically and socially, everything is being done.
"If we leave things as they are, this country will go down the stream because what we inherited is a lot of loans, a lot of money that was borrowed, more than RM1tril.
"We inherited this and whether we like it or not we have to pay, that's the constraint that we face," he said.
Dr Mahathir added that despite the challenge, the government will deliver development to the people from whatever income that it derives.
On another question on how much the government had decided to hedge crude oil prices against the Budget 2019, Dr Mahathir said it has been targeted at US$70 (RM291.2) per barrel.
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