Mustapa: We need to spend

WHILE the fiscal deficit may be a concern, an increase in government spending is vital to revive the economy in light of the impact of Covid-19, says Datuk Seri Mustapa Mohamed.

“We need to spend and that is why the government is taking an approach of not looking too much into the fiscal deficit.

“It is not that we are disregarding the fiscal deficit but it is not as relevant in light of the current situation,” the Minister in the Prime Minister’s Department said when answering a question raised by Datuk Seri Saifuddin Nasution Ismail (PKR-Kulim Bandar Baru) yesterday.

Mustapa said spending was necessary in light of the impact of the pandemic on the nation’s economy, which has also affected government revenue.

“We need a new approach that takes into account the current situation of the global economy and also a drastic drop in revenue.

“To generate revenue, we need to spend,” he said.

Mustapa acknowledged that Covid-19 has greatly impacted several sectors, particularly the tourism and aviation industries, following the closure of borders by many countries to curb the spread of the virus.

Citing the closure of the border between Johor and Singapore, he said it had greatly affected the economy of Johor, noting that Johor Mentri Besar Datuk Hasni Mohammad had submitted proposals to the National Security Council to help ease the situation.

Earlier to a question by Datuk Mohd Fasiah Mohd Fakeh (Bersatu-Sabak Bernam), Mustapa said the third wave was expected to have an impact on earlier forecasts on the country’s economy.

‘’The economy is forecast to shrink by between 5.5% and 3.5% this year and is expected to grow between 5.5% and 8% next year.

“However, the growth forecast for October and November may be affected following the movement control order in Selangor, Kuala Lumpur, Putrajaya and Sabah,” he said.

On the whole, Mustapa said there was positive growth for the economic indicators for August and September as compared to the first quarter of this year.

He said exports and sales of passenger cars grew by 13.6% and 8% in September while the total value of the sundry and wholesale sectors grew by 2.5% in August.

In August, the Dewan Rakyat passed the Temporary Measures for Government Financing (Covid-19) Bill to allow the government to borrow up to 60% of the Gross Domestic Product in an effort to ease the burden faced by the people and businesses.

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