Malaysia PM unveils generous budget as elections loom

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KUALA LUMPUR: Malaysia’s embattled prime minister announced a 2017 budget featuring handouts to key voting blocs on Friday, as elections loom with his government under pressure over a massive corruption scandal.

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Najib Razak also announced more spending for infrastructure projects to help stimulate a economy that is decelerating amid the global oil slump and a slowdown in major trading partner China.

Najib and his ruling establishment have been rocked since last year by allegations of a vast international scheme of embezzlement and money-laundering involving a sovereign fund called 1MDB.

In a July lawsuit, the US Justice Department detailed how an unnamed “Malaysian Official No. 1”—later identified by officials as Malaysian Prime Minister Najib Razak—and his family members and close associates diverted billions from the fund.

The affair has cast doubt over the outcome of parliamentary polls due by 2018, but which could come as early as next year. The ruling coalition Najib now heads has been in power for nearly six decades.

Najib tabled a budget of 260.8 billion ringgit ($62.35 billion), or 3.4 percent higher than for 2016, while ticking off a range of populist perquisites such as increases in annual cash assistance to low-income families.

But he rejected suggestions that such items were motivated by electoral concerns.

“The cash handout is not bait. It is a sincere gift,” Najib told parliament.

He said economic growth will slow slightly to between 4.0-4.5 percent this year and 4.0-5.0 percent in 2017. Growth was 5.0 percent in 2015.

But Najib insisted Malaysia’s diversified economy remained resilient.

The opposition almost annually accuses Najib’s government of using government largesse—and authoritarian tactics—to offset increasingly weak electoral showings.

Ninety-one-year-old former premier Mahathir Mohamad, a harsh critic of Najib over 1MDB, said this week that public “money is being used to win popularity for the Prime Minister.”

The new populist measures included increases in affordable housing and loans for home purchases.

Najib also said the government would allow civil servants—an important pro-government voting bloc —to buy homes at discounted prices. Many civil servants also will have their contracts extended.

Analysts labelled it a populist budget, but said constraints imposed by Malaysia’s fiscal situation limited the spending.

“It’s not quite the full-blaze election budget that was expected,” said Song Seng Wun, an economist with CIMB Private Banking.

“The fiscal constraints on his government are real.”

Najib and 1MDB, or 1Malaysia Development Berhad, both deny wrongdoing.

But Najib is yet to fully explain his role in the scandal, which is being investigated by authorities in a half-dozen countries, including the United States and Switzerland.

Opposition MPs halted Najib’s budget speech for several minutes, shouting and raising placards demanding he come clean on 1MDB.

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