SEREMBAN: Budget 2021 which will be tabled next week has to be an expansionary one focusing on saving jobs as well as small and medium enterprises (SMEs) most affected by the Covid-19 pandemic, says Datuk Seri Mohamad Hasan (pic).
The Umno deputy president, who is also known as Tok Mat, said on Saturday (Oct 31) that the government should double the assistance to the most affected groups and sectors as the third wave of the pandemic was likely to further delay the country's recovery to the first quarter of 2021.
"We cannot let the people continue to live in misery, for businesses to be closed forever or for the country's economy to be irreversibly damaged.
"For now, the narrative to reduce the government deficit or to implement fiscal consolidation measures must be pushed away.
"Do not worry too much about the national debt limit, which has recently been increased to 60% of the gross domestic product," he said in a statement.
Quoting the "Families on the Edge" report by the United Nations Children's Fund and the United Nations Population Fund, Mohamad said one in two low-income families in Kuala Lumpur now lived in absolute poverty.
Of these, 37% find it difficult to buy enough food and 70% find it difficult to buy basic necessities.
The high-income group, he said, would be less affected, but the B40 and M40 groups, especially those 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 Budget 2021 is the survival and well-being of the people.
He said to cover the increase in spending, the government could continue to source for loans domestically by leveraging the local bond market, especially with the Malaysian Government Securities (MGS) and Malaysian Government Investment Issue (MGII).
The use of domestic loans would not adversely affect the economy, as Malaysia would not be bound by 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 foreign interest rate fluctuations, as well as the risk of currency depreciation as the debt is denominated in ringgit," he said.
However, Mohamad warned that the strategy of doubling spending and stimulus in Budget 2021 was not a "blank cheque" for the government to spend extravagantly.
Government spending, he said, still needed to be planned and implemented with full accountability and transparency.
Fiscal consolidation efforts, he said, must be postponed until 2022, in the hope that the country's economy will be fully restored.
"At that time, if the economy recovers, spending can be reduced and austerity measures brought back," he added.
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