The economic impact from Covid-19 has been severe in many nations including Malaysia.
Many businesses have had to shut down and more than 800,000 people have lost their jobs.
Expectations are high that Budget 2021 will contain measures to help the people and businesses while promoting economic recovery.
The following are some of the key facts to know about where the money from previous budgets came from and how it was spent.
One way to get a rough idea on some of the subjects and topics which previous budgets focused on is to look at the most frequent key words used in the budget speech text.
In terms of revenue, a big chunk of the allocation in budget 2020 was from direct taxes which made up almost 60% of government revenue.
Corporate income tax contributed 53% of the direct taxes, while individual income tax contributed 26%.
Other government revenue comes from non-tax revenue (22%) and indirect taxes (19%).
With most companies struggling due to movement restrictions made to control the spread of Covid-19, the government’s revenue and budget allocation for next year is expected to be smaller.
However, Malaysia is not the only country affected by shrinking economic growth due to the pandemic.
All Asean countries are faced with a much lower Gross Domestic Product (GDP) growth this year, with Malaysia projected to record the third worst drop in GDP after the Philippines and Thailand, at -6% compared to last year.
The economy is expected to turn a corner next year, with projected recovery in GDP in most countries.
In the meantime, many businesses are struggling to stay afloat, contributing to a drop in incomes and rising unemployment.
The country’s unemployment rate has so far risen to 5.1% in the second quarter of this year from 3.5% in the first quarter.
Many of those affected by unemployment are relying on the government’s assistance to relieve their financial burden.
The government announced several economic stimulus initiatives worth RM305bil to help cushion the impact of Covid-19 on the country, with 33% of the allocation distributed towards a loan moratorium, which was in effect from April to September 2020.
With the loan moratorium and other financial assistance ending this year, many are hoping that Budget 2021 will extend aid to help them weather this storm.
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