Malaysia Cuts Spending, Gets Bond Rating Upgrade
The thing about being a small, emerging market country as opposed to a developed world welfare state, is that you can’t get away with fiscal bloat for long. Markets punish bad ideas quickly. That’s why Malaysia has been forced to get spending under control.
“The prime minister of Malaysia, Najib Razak, has sought to draw a line under the country’s decades-old reliance on energy and food subsidies, saying they were “no longer sustainable” as his government embarked on an austerity drive including cuts to civil servant perks.
Starting on New Year’s day, government ministers’ entertainment allowances will be cut by 10 per cent, while new applications to renovate government offices will be frozen. There will also be restrictions on food and beverages at official government functions. Many civil servants will be banned from business class flights and restrictions will be slapped on gift-giving.”*
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