Without these special dividends, Malaysia would have fallen into an operating deficit — that means the government will have to borrow not only to fund capital development but also to pay for debt servicing charges (see Diagram).
We are growing increasingly worried about Malaysia’s fiscal position. The government’s operating balance will fall into a deficit this year, for the first time since 1987 — unless Petroliam Nasional Bhd (Petronas) makes yet another bumper dividend payout. In fact, the call for special dividends from the national company has increasingly been the go-to solution for the government — instead of addressing its deteriorating fiscal health. Petronas has coughed up special dividends in three of the last four years (see Chart 1)
