Fiscal deficit is not a factor in the 2021 budget due to Covid-19, says Tok Pa



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Prime Minister’s Department Minister Mustapa Mohamed says the fiscal deficit was previously used to determine the government’s ability to provide aid. (Photo by Bernama)

KUALA LUMPUR: The government will not use the fiscal deficit as a criterion for preparing next year’s budget due to the impact of Covid-19, a minister al Dewan Rakyat told today.

The Prime Minister’s Department (Economic Affairs) Minister Mustapa Mohamed said that as the economic slowdown is expected to reduce government revenues, Putrajaya may have to reconsider using the fiscal deficit as a benchmark this time.

The fiscal deficit refers to the deficit of the government’s income compared to its expenditures.

“Before the Covid-19 pandemic, the fiscal deficit was one of the factors when it comes to the government’s ability to offer public aid.

“(But now) we have to look for new ways based on the country’s income that has fallen drastically,” Mustapa said in response to a question.

He said that the government needs to spend on the people even when the nation’s income is low and therefore “Putrajaya has made the decision not to focus on the fiscal deficit.

Mustapa also said that the government is reviewing the fiscal space, referring to the difference between the debt limit and the actual levels of debt, as it may not be as relevant as before in the fight against Covid-19.

The budget for next year is expected to be presented on Friday.

Earlier, Saifuddin Nasution (PKR-Bandar Baharu Kulim) asked the minister to detail any “extraordinary” plans to boost the economy following rising unemployment with the aviation, tourism and arts and entertainment sectors most affected.

Saifuddin noted that Malindo will cut 2,000 staff members, adding to the more than 700,000 Malaysians who are now unemployed.

“There are so many Malaysians with no income,” he added.

Mustapa acknowledged that the three sectors face financial problems, especially the tourism sector, with the country’s border closed.

He said that particular emphasis will be placed on helping the tourism sector in the budget, especially since it had contributed up to 16% of gross domestic product (GDP) in previous years.

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