ON Friday, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz will be tabling Budget 2022 in the Dewan Rakyat. This comes at a time when the country’s economy is recovering following the reopening of most economic sectors after a prolonged slump brought about by movement restrictions triggered by the Covid-19 pandemic.
This is why I believe there are heightened public expectations that Budget 2022 will further expedite economic recovery. Any economics student would know that pump priming the economy is a sure-fire way to rev it up after a prolonged period of slump.
In theory, increased government spending translates into more money in circulation, resulting in higher disposable incomes for the people who, in turn, will spend more, creating a virtuous cycle that feeds into economic growth. A growing economic pie makes everyone happy after a painful period of contraction.
But I would caution the Finance Ministry to tread carefully in expanding our fiscal space via borrowings to jumpstart the economy. The ministry needs to strike a balance between short-term needs to support green shoots of growth and long-term financial sustainability.
Since March 2020, the government has introduced a slew of financial stimulus packages like Permai, Pemerkasa, Prihatin and Pemulih, among others, to help disadvantaged groups like the B40 (lower income group) and small and micro enterprises. Going by news reports, some RM530bil has been allocated in these packages.
That is a lot of fiscal and non-fiscal allocation. To add to that, Budget 2021, at RM322.5bil, was the largest ever in Malaysian history. It would be foolhardy to think that our reserves are unlimited and we can keep digging into our kitty, particularly when revenue has been heavily reduced due to various lockdown periods. Any prolonged budget deficits, especially large ones, are unhealthy for the country in the long run.
And just recently, the government raised the statutory debt-to-GDP ratio to 65% from 60%. While the move may be necessary, it underscores the fact that the government’s financial resources are being drained.
This is why I feel the private sector should step in and step up to help the nation heal. I hope it will do all it can to support the country’s growth in the coming years by providing jobs and ensuring that profits made are reinvested back into Malaysia.
As for us the rakyat, we should have realistic expectations of Budget 2022. We cannot expect the government to keep splurging. That would be irresponsible and detrimental in the long run.
Whenever possible, we all should try and meet the government halfway by doing our part, one of which is to take care of our own health and to stick to SOP to reduce the risk of infection.
In my humble opinion, the government has done a lot to help cushion the devastating impact of Covid-19 over the last 20 months. We do not want our children and grandchildren to pay a heavy price for our financial liabilities.
It is time for the private sector to play a bigger role and for us the rakyat to reciprocate with realistic expectations of Budget 2022 for the sake of the nation’s long-term socio-economic well-being.
Subang Jaya, Selangor