The Umno deputy president said the government must double the assistance to the most affected groups and sectors as the third wave of the pandemic would further delay the country’s recovery to the first quarter of 2021.
He said the government must not let the people continue to live in misery, businesses to be closed forever, and the country’s economy trapped in irreversible damage mode.
“For now, the narrative to reduce the government deficit or to implement fiscal consolidation measures should not be the primary concerns.
“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 live 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 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 as the focus of Budget 2021 should be on 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 on the local bond market, especially the Malaysian Government Securities and Malaysian Government Investment Issue.
“The use of domestic loans will not adversely affect the economy as Malaysia will not be bound by foreign regulations, compared to loans with strict regulations from institutions such as the International Monetary Fund.
“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.
Mohamad, however, warned that the strategy of doubling spending and stimulus in Budget 2021 is not a “blank cheque” for the government to spend extravagantly.
“Government spending still needs to be planned and implemented with full accountability and transparency,” he said.
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