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SEREMBAN: The 2021 budget, to be presented next week, should be expansive and focus on saving jobs, as well as the small and medium-sized enterprises (SMEs) most affected by the Covid-19 pandemic, says Datuk Seri Mohamad Hasan . (Photo).
The vice president of Umno, also known as Tok Mat, said on Saturday (October 31) that the government should double assistance to the most affected groups and sectors, as the third wave of the pandemic is likely to further delay the recovery of the country. the first quarter of 2021.
“We cannot allow people to continue living in misery, businesses to close forever, or the country’s economy to be irreversibly damaged.
“For now, the narrative to reduce the public deficit or implement fiscal consolidation measures must be rejected.
“Don’t worry too much about the national debt limit, which has recently increased to 60% of gross domestic product,” he said in a statement.
Citing the “Families on the Edge” report from the United Nations Children’s Fund and the United Nations Population Fund, Mohamad said that one in two low-income families in Kuala Lumpur now lived in absolute poverty.
Of these, 37% have difficulty buying enough food and 70% have difficulty buying basic needs.
The high-income group, he said, would be less affected, but the B40 and M40 groups, especially those who are self-employed, could lose their livelihood. This would widen the inequality gap between them.
Mohamad said the government can deal with the national debt later, as the focus of the Budget 2021 is the survival and well-being of the people.
He said that to cover the increase in spending, the government could continue to borrow domestically by leveraging the local bond market, especially with the Malaysian Government Securities (MGS) and the Malaysian Government Investment Issuance (MGII).
The use of domestic loans would not negatively affect the economy, as Malaysia would not be subject to foreign regulations, compared to loans with strict regulations from institutions such as the International Monetary Fund (IMF).
“Furthermore, local loans are less vulnerable to the risk of fluctuations in foreign interest rates, as well as the risk of currency depreciation, as the debt is denominated in ringgit,” he said.
However, Mohamad cautioned that the strategy of doubling spending and stimulus in the 2021 Budget was not a “blank check” for the government to spend extravagantly.
Government spending, he said, still needs to be planned and implemented with full accountability and transparency.
Fiscal consolidation efforts, he said, should be postponed until 2022, in the hope that the country’s economy will fully recover.
“At that time, if the economy recovers, spending can be reduced and austerity measures restored,” he added.
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