The need for budgetary governance

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

FINANCE Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz is inviting the public to share their ideas for Budget 2022. He is hoping that by doing so, it will help improve the annual Budget preparation process.

The Ministry of Finance (MOF) will publish four public consultation papers (PCPs) to complement the Pre-Budget Statement issued earlier. The four PCPs pertain to Improvement of the Government Procurement Policy on Local Goods/Services and Procurement Policy involving the Bumiputera; Improvement of Cash Assistance for the people; Review of Tax Incentives; and the Drafting of the Fiscal Responsibility Act (FRA).

As pointed out by Tan Sri Sheriff Kassim of G25, the pre-Budget statement marks a significant break from past practice. I concur with him. All these years the MOF regarded the Budget as a state secret and kept under lock and key until Budget Day. The press, too, was kept in the dark.

Past finance ministers usually made their grand entrance, clutching the bag containing the Budget speech, surrounded by aides not unlike the movie Men in Black, then deliver their speech for an hour or so, amid table banging and catcalls.

For the public, the entire Budget preparation was so secretive, done in a dungeon-like cavity, almost oblivious to the world outside.

The minister was like Big Brother coming out with the medicine to spruce up the economy, to help the poor and to ensure the country is chugging along the pre-ordained path.

Not anymore. This time the idea of government-knows-all is obsolete.

The MOF is not the master of the fiscal universe. After all, this is no ordinary time. Difficult times demand different budgetary disciplines and protocols.

There have been serious criticism about how the government manages the Covid-19 pandemic, in particular the responses towards saving livelihoods, not just lives.

The economic programmes have not been stellar to start with. The previous prime minister, Tan Sri Muhyiddin Yassin, realised the need to set up the National Recovery Council (NRC), unlike the National Economic Action Council (NEAC) created by the then prime minister Tun Dr Mahathir Mohamad to manage the aftermath of the Asian Financial Crisis in 1998.

The NRC had yet to see the light of day when there was a change of government. We are not sure what the new Prime Minister has in mind. But the Budget tabling in late October will set the agenda – for better or worse – for a country struggling with the pandemic and an economy in the doldrums.

We certainly need to come out with a budget with a difference. “Ekonomi Covid” (Covid economy), as popularised by the Indonesians, demands the need for total rethinking. It cannot be business as usual.

There have been lots of brickbats on how industry players, business communities and civil societies have not been consulted in the formulation of economic plans during the pandemic.

Many believed the plans were not relevant at best, unworkable at worse. There was no clear coordination and no whole-of-nation approach. There has been little attempt to effectively manage short-term plans and long-term sustainability and other fiscal risks.

Budget 2022 hopefully will rectify that. First and foremost there is a need to observe the principles of budgetary governance. It is not just about the process of formulating the yearly Budget, but overseeing its implementation and aligning it with the goals of the stakeholders.

As argued by many economists the failure of many government Budgets in developing countries is the inability to ensure good practices across the full spectrum of Budget activity. Unless it is monitored properly, it will have little impact on people’s lives.

Budgets are for the people, not what the government believes they want. In trying times like now, the Budget will be the impetus to economic recovery. It will also provide the much needed vaccine for economic ills as a result of the pandemic. As always in the argument about managing “Covid economy”, we need an exit strategy hoping that by next year, things will get better on the Covid-19 front.

Nonetheless it has to start now. Budget is not just technocratic management, it is about tailoring it to the needs of people. The people want a Budget that matters to them. Budgetary rules must not be compromised, transparency and accountability are paramount.

I am not sure how much engagement can be done by Tengku Zafrul considering he has about a month to present his Budget. But he must not be deterred. As he himself pointed out, this is a very important Budget, especially to guide Malaysia out of the current impasse.

It is easier said than done, but let’s give him the chance.

Johan Jaaffar is a journalist, editor and for some years chairman of a media company, and is passionate about all things literature and the arts. And a diehard rugby fan.

The views expressed here are entirely his own.

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