PETALING JAYA: There is a need to strengthen Malaysia’s fiscal position given that recovery would determine whether the country can reduce some of the support measures taken during the Covid-19 pandemic, says an economist.
Dr Yeah Kim Leng, director of the economic studies programme at Jeffrey Cheah Institute of Sunway University, said the exit strategy for some of these policies have to be incorporated due to fiscal constraints.
These include the medium-term measures that Malaysia would want to reduce, such as its fiscal deficit, tax servicing and debt level.
His comments came amidst discussions whether the tabling of Budget 2023 or the general election should come first.
He said tabling Budget 2023 after GE15 would help avoid populist measures that could hamper much-needed fiscal reforms for the country.
He added that it would also be more desirable for a government with a new mandate to table Budget 2023 as it could implement the reforms needed to ensure Malaysia was placed on a sustainable fiscal path.
He said the key fiscal concern was the huge subsidy burden that had been implemented to counter the global energy and food price shocks, which have shielded Malaysia from global inflation.
Should the ruling government hold the general election after Budget 2023, then the Budget might not be able to introduce new measures without jeopardising its election chances, he noted.
“If they (ruling government) undertake too tough a fiscal tightening, then their electoral chances will be affected,” he added.
“A long-term growth prospect is crucial to avoid an increase in vulnerability to external shocks and higher risks of a global downturn.”
Fiscal reforms should be carried out, including broadening the tax base and reintroducing the GST (goods and services tax).
“A new mandate, with a stable political environment, will be able to introduce tough reforms that are necessary and not populist in nature,” Yeah said.
Political analyst Prof Dr Sivamurugan Pandian said the Prime Minister could consider tabling the Budget earlier to let voters know what areas he wanted to focus on economically and socially.
However, he added that should Budget 2023 be tabled before the general election, the move might be criticised as it could be considered an “Election Budget” that was done solely to entice voters.
He suggested the Prime Minister consider dissolving Parliament after the National Day and Malaysia Day celebrations.
“On Aug 21, he can show his one-year PM leadership report card to convince voters they need not worry where the nation is heading to,” he added.
Datuk Seri Ismail Sabri Yaakob was sworn in as Prime Minister on Aug 21 last year.
“The end of September could be good to avoid future uncertainty and instability as it is difficult to predict what will happen in the next six to eight months from now,” said Sivamurugan.
International Islamic University Malaysia’s constitutional and administrative law lecturer Prof Dr Nik Ahmad Kamal Nik Mahmod believed that the general election would only be held if the government’s political position was at risk.
“If Perikatan Nasional withdraws its support for the Prime Minister now, then it is inevitable that the general election would be held before the Budget is tabled,” he said.
He said the approval of the Budget before a general election would ensure the country having the finances to use in the next fiscal year, despite any political crisis that may ensue after that.
However, he said the details of the Budget might be used to influence voters’ choice in the general election and the government would potentially table a “voter-friendly” Budget to garner support.
