Our 2009 GDP forecast is from 5.5 percent to 3.5 percent, though independent business groups have put the growth to be between only from 1 to 2 percent. Nevertheless, even when looking into the official figures, one can obviously see that it has widened the national budget deficit forecast to 4.8 percent from the earlier forecast of less than 4 percent.

To pump-prime the economy, a RM7 billion stimulus package was announced last October and this is on top of the RM207.9 billion budget announced by the government in August. For the past twelve years, it has always been deficit budgets for the nation.

Beyond this economic momentum to fend off an imminent economic downturn, the government has no viable choice but to observe a more prudent management of the economy. Failing which, mere pump-priming the economy may not have any impact on cushioning the effects of an economic slow-down, especially when other developed and developing countries are equally affected by an economic downturn as well.

When the economy slows down there are bound to be less job opportunities and thus consumer spending too diminishes. We observe now the increase number of job retrenchment in many growing economies, the plummeting of prices for raw commodities and people are spending less due to less income and high prices of goods.

To cushion the effects of a recession, a lot more can be done to create a buffer of sorts to the economy so that the people do not suffer much. When inflation creeps in, it becomes hard to make prices of goods affordable to the people. This is where prudent management of resources and the economy is crucial.

The credit level of the nation can no doubt affect the economy. Borrowing and spending generates an economy but unbridled spending on borrowed money, seeking comfort in unlimited credit facilities or habitually living on credit and not being able to pay back, and high wastage and seepage of funds are going to have a negative impact to the economy. Unfortunately, this has been the practice in some sectors of our society.

The habit of over spending using credits cards and ending up not being able to pay up or leaving too much outstanding balance is an abuse of the country’s credit facilities. Due to this habit, over 40 percent of our population is on the brink of a credit crunch.

Many, among them young adults, have been declared bankrupts due to this abuse. It can also put the country in debt beyond control. Uncontrollable and easy borrowing could lead to irrecoverable loss of wealth and this affects the economy.

Prudent management of funds would bolster the economy and lead to a greater economic impact. High wastage in most developing economies is due to seepage of funds due to poor management and corruption and these are often not accounted for.

Besides, when non-feasible projects are initiated with heavy borrowing just for political expediency, they end up affecting the economy more when they collapse.

Stringent spending, sensible borrowing, less corrupt management and scrupulous accountability of funds would have greater economic impact on the nation. Irrepressible spending, borrowing, corruption and the lack of accountability would only lead to irrecoverable loss of wealth for the nation and the loss of confidence in the financial management of the country.

Spending is necessary to boost the economy but uncontrolled spending and wastage, poor management of funds and depending too much on borrowed money can impair the economy.