The government's massive RM60 billion stimulus package met with scepticism today, as economic analysts questioned if it will avert recession and how cleanly it will be implemented.

Deputy premier Najib Razak announced the package yesterday, saying the much bigger than anticipated spending plan would "contribute towards mitigating the impact of the global contraction on the domestic economy."

But despite the measure, and a RM7 billion stimulus package announced last year, he said the economy could still contract by up to 1.0 percent in 2009, dumping the earlier forecast of 3.5 percent growth.

Standard Chartered said despite the size of the plan, "its ability to keep 2009 growth in positive territory remains in question" and that the deficit, which will jump to 7.6 percent this year, could threaten credit ratings.

ING was unimpressed by the big-spending initiative, saying it expected the economy to contract by 2.2 percent this year, and that the government's political woes raised the risk of inappropriate spending.

"The political situation makes us think a lot of the spending will be politically-directed," it said.

Market disappointed after hype

The spending plan is an important test for Najib, who is due to be appointed premier at the end of the month and inherits the task of clawing back support for the ruling coalition after a battering in elections last year.

Opposition leader Anwar Ibrahim, who was finance minister before being ejected from the coalition in 1998, said there was a grave risk of "leakage" as the huge amount of funds was disbursed.

"As far as the package is concerned, there is no sign of reforms," he said. "Our fundamentals are cracking, we are facing a major crisis. Will (Najib) stop the practices of awarding contracts to cronies through direct negotiation?"

Anwar, who has predicted a 2.0 percent contraction in 2009, said massive retrenchments and unemployment were expected in the months ahead.

"Clearly we are in the recession already. The government has refused to acknowledge it," he told a press conference.

Analysts at Citibank also said the market would be disappointed with the package after "the hype created over the past few weeks".

"Execution is the key, and it is still too early to quantify and build in the benefits," it said.