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SEREMBAN: The 2021 budget has to be expansive that focuses on saving jobs, as well as small and medium-sized companies that are the most affected by the Covid-19 pandemic, says Datuk Seri Mohamad Hasan.
The vice president of the Umno said that the government should double assistance to the most affected groups and sectors, since the third wave of the pandemic would further delay the country’s recovery until the first quarter of 2021.
He said the government should not allow people to continue living in misery, businesses to close forever and the country’s economy to be trapped in irreversible damage mode.
“For now, the narrative to reduce the public deficit or implement fiscal consolidation measures should not be the main concern.
“Don’t worry too much about the national debt cap that 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 lives in absolute poverty.
Of these, 37% have difficulties buying enough food and 70% have difficulties buying basic necessities.
“The high-income group will be less affected, but the B40 and M40, especially the self-employed, will lose their livelihoods and this will widen the inequality gap between them,” he said.
He, the government, could deal with the national debt later on, as the focus of Budget 2021 should be on 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 the issuance of Malaysian government securities and Malaysian government investment.
“The use of domestic loans will not negatively affect the economy as Malaysia will not be subject to foreign regulations, compared to loans with strict regulations from institutions such as the International Monetary Fund.
“In addition, local loans are less vulnerable to the risk of fluctuations in foreign interest rates, as well as the risk of currency depreciation, since the debt is denominated in ringgit,” he said.
Mohamad, however, cautioned that the strategy of doubling spending and stimulus in the 2021 Budget is not a “blank check” for the government to spend extravagantly.
“Government spending has yet to be planned and implemented with full accountability and transparency,” he said.
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