KUALA LUMPUR: The Government has put on hold the RM1.7bil purchase of Cougar EC 725 helicopters due to the current economic climate.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said the money would now be used for other public programmes which would benefit the people.

He said the decision was made during the Economic Council meeting on Oct 13.

'We need money but we cannot be borrowing. If we feel that some projects need to be postponed then we will decide accordingly,' Abdullah told a press conference after hosting a Hari Raya and Deepavali open house at the Defence Ministry yesterday.

Abdullah, who is Defence Minister, said the purchase of the helicopters would be reactivated once the economy improved.

'We have to decide by 2011 and we may buy earlier if we have the money or we may buy fewer than what we require,' he added.

Abdullah said the RMAF would have to continue using its 28 Nuri helicopters, which he said were old and had been involved in accidents which cost the lives of soldiers and civilians.

On the Letter of Intent issued to Eurocopter for the purchase of the Cougars, Abdullah said the Government would postpone the project and no compensation would be involved.

He said the Public Accounts Committee could still go ahead and scrutinise the Cougar helicopter deal.

On reports of irregularities over the project, Abdullah said the tender was participated by many companies.

On allegations that another company had offered lower prices he said: 'The (Malaysian) specifications themselves mean that it will cost more.'

On reports that Brazil had bought the Couger at a lower price, Abdullah replied: 'The Brazilian version was not fixed to the level that we required. If it's only for transport, of course it will cost much less.'

Abdullah said the postponement of the purchase and reallocation of the budget did not mean that the economy was in a recession.