KUALA LUMPUR (Reuters) – Malaysia has decided to axe a controversial $657 million military helicopter order in the government’s first major budget cutbacks since the global financial crisis, an influential news website reported on Sunday.

“The Eurocopter deal is off due to the bleak economic times ahead,” the Malaysian Insider (www.themalaysianinsider.com) said, quoting an unidentified source.

It said Finance Minister Najib Razak decided at the weekend to scrap the contract for 12 EC725 helicopters awarded to the European helicopter maker following a review of state spending.

Najib’s spokesman told Reuters said he had not heard about the decision while defence ministry officials had no immediate comment on the story.

Malaysia unveiled an economic stabilisation plan last week in its first admission of the effects of the global financial crisis on its trade-dependent economy.

Najib said at the weekend he would announce more measures to stimulate the economy when he winds up 2009 budget debate on Nov. 4.

He will also cut official economic growth target for 2009 from 5.4 percent currently.

Najib and Second Finance Minister Nor Mohamed Yakcp were reported on Sunday as saying Malaysia would not slip into recession next year.

“We nay feel the pinch of the financial meltdown but I am confident we will not fall into a recession,” Nor Mohamed was quoted by the New Sunday Times as saying. Continued…