NOW the prospect of the Parliament been dissolved can be temporarily put in the backburner, the spotlight should fall on Budget 2023 with a focus to navigate Malaysia out of potential economic ills stemming from next year’s looming global recession amid the backdrop of an inflation-induced high interest rate environment.
Whether Budget 2023 is an election budget or otherwise, the Government of the day should take with a pinch of salt the feedback by former prime minister and National Recovery Council (MPN) chairman Tan Sri Muhyiddin Yassin that the rapid depreciation of the ringgit and spiralling inflation had made life unbearable for regular Malaysians with the B40 income group having effectively turned into the B60.
Despite Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz’s assurance that Malaysia’s economy is on solid and stable footing despite global economic headwinds sparked by geopolitical tensions and other external events, the gut feel is that there are elements of self-denial given that cost of living has become grossly pricier across the board, to begin with.
While the ringgit’s depreciation against the greenback, Thai baht and even the Singapore dollar is worrisome, the former CIMB Group Holdings Bhd CEO politically-laced defensive argument is rather worrisome.
For example, Tengku Zafrul kept on insisting that Malaysia’s economy is fundamentally sound while the exchange value of each country’s currency is not a benchmark to determine if they are facing an economic crisis.
As the hole in the pocket of Malaysians is only getting bigger by the day, Auditor-General Datuk Seri Nik Azman Nik Abdul Majid has recently sounded the alarm bell over the sharp increase in the Federal Government’s debt which stood at RM979.81 bil in 2021 or RM100 bil more from RM879.56 bil in the previous year.
Although there was a basis for the debt ratio to be 63.4% to the country’s gross domestic product (GDP), Nik Azman cautioned that such high debt increase makes the country’s economic and financial health unsustainable.
As pointed out by the Public Accounts Committee (PAC) chairman Wong Kah Woh, the increase in debt also caused total liabilities of the Federal Government in 2021 to amount to RM1.3 tril or 84% to GDP.
‘Clean bill of health’
Although the Government’s financial statement for 2021 was given the Auditor General’s Certificate without reprimands, there were matters emphasised by the Auditor-General that required attention.
“Among matters emphasised are the repayment of matured loans using new borrowings, the reduction of the percentage of development expenditure, the increase of federal debt and different recognition from the revenue recognition principle in modified cash basis accounting,” reckoned the Ipoh Timur MP.
Last year, gross borrowings escalated 11.6% to RM217.2 bil from RM194.55 bil in 2020, of which 52.4% or RM113.76 bil was utilised for principal repayments. In addition, a sum of RM62.32 bil or 28.7% of the gross borrowings was transferred to the development fund while RM38 bil or 17.5% was transferred to the COVID-19 Fund.
“Of the RM62.317 bil transferred to the Development Fund, RM40.99 bil was used for development expenditure compared with RM37.53 bil in 2020,” noted Wong.
“A total of RM12.612 bil was utilised for financing Private Finance Initiatives (PFI) liabilities and commitments on guarantees, while RM8.711 bil of development expenditure was a re-classification from operating expenditures.”
Regarding payment on interest, Wong said 16.3% of revenue collection was used for that purpose. “This means that for every RM1 collected, 16 sen is used for loan interest payments,” he asserted.
In this regard, Wong said the PAC would continue to play a check and balance role against the executive branch in financial and procurement management so as to ensure that it complies with stipulated procedures in the Parliamentary Democracy with Constitutional Monarchy system in this country. – Oct 7, 2022
