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Malaysia’s budget today could be the largest in its history as the beleaguered Muhyiddin Yassin government will have to preserve people’s lives and livelihoods, and also boost the economy, amid the Covid pandemic. 19.
While a substantial amount of funding would be channeled to address the pandemic and support frontline workers, the vulnerable and businesses must also be assisted so they can fuel growth and aid in recovery next year.
Finance Minister Tengku Zafrul Aziz has said that the allocation for the 2021 Budget will be higher than the 2020 Budget of RM297 billion (S $ 97 billion), and that the government will not cut development spending.
“I think this is the most important budget in our history … we are going through the worst crisis,” Datuk Seri Tengku Zafrul was quoted as saying by the New Straits Times on Wednesday.
Some economists think it could be an electoral budget.
Azrul Azwar, an economist at a company linked to the state government, told The Straits Times: “In view of the worsening of political instability day by day, the 2021 budget could well be an electoral budget, as there is a high probability that it will be hold early general elections sometime in the first half of next year, once the pandemic is under control, coinciding with the time when a safe and effective vaccine hits the market. “
Tan Sri Muhyiddin’s Perikatan Nasional (PN) pact has a slim majority in parliament, and his spending plan could be challenged by political rivals seeking to overthrow his government.
Even if the budget is approved, threats from NP allies to withdraw their support and no-confidence motions from the opposition could still trigger an early election.
Analysts say that among the top priorities would be expanding the social safety net, protecting the urban poor, and strengthening the health sector, all of which have suffered the brunt of the Covid-19 pandemic.
The government could make an allocation to finance unemployment insurance and wage subsidies.
Professor Woo Wing Thye, professor of economics at the University of California and research professor at Sunway University, said: “It should be the largest budget deficit, both in absolute size and as a percentage of gross domestic product (GDP).”
Expect to see a budget that contains a direct infusion of purchasing power into the economy through public spending, changes in regulations that lower the cost of living, and incentives to support an economic recovery.
With 5.6% of households in absolute poverty and 16.9% in relative poverty, the results of a United Nations study published last week showed that many low-income households have worsened after the pandemic and require urgent social protection. Absolute poverty is when one cannot afford to buy basic necessities, while relative poverty compares the economic position of one household with that of others.
UNICEF Malaysia Representative Rashed Mustafa Sarwar said: “It is critical that we seize the opportunities created by the 2021 Budget and Malaysia’s Twelfth Plan to rethink social protection in Malaysia, to ensure that no family or child is left behind. behind”.
This year, the Muhyiddin government has implemented four stimulus packages worth RM305 billion to cushion the impact of Covid-19.
Fiscal deficits could be around 90 billion ringgit or even exceed them, with a fiscal deficit-to-GDP ratio easily higher than 6% in both 2020 and 2021, Azrul said.
Muhyiddin said that a substantial amount of funding would be set aside to address the pandemic and support frontline workers.
“We will do it now and we will continue to do so until Covid-19 ends,” he told Bernama and local television stations on Wednesday.
Allocations should be made for the procurement of the Covid-19 vaccine, but some experts hope that Malaysia will finally study the development of human vaccines for diseases.
Professor Awang Bulgiba Awang Mahmud, an epidemiologist at the Universiti Malaya, told The Straits Times: “There are so many things that are required for Covid-19, but I’m sure the government has already set aside funds to fight the pandemic and buy vaccines .. “
He said he hoped to see allocations for the development of rapid and reliable Covid-19 diagnostics, which would reduce Malaysia’s reliance on foreign tests, and funding for human vaccine research and development.
Malaysia’s economy plunged into its first contraction in the second quarter of this year, posting its worst performance in nearly 22 years, but has since shown signs of recovery, with the central bank expecting further improvement next year.
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