FORGET about decreasing fiscal deficit for now and focus on short-term spending to revive the sluggish economy, says Umno.
In a statement, its deputy president Datuk Seri Mohamad Hasan said Budget 2021 should have an expansive approach to save jobs, traders and businesses affected by the COVID-19 pandemic.
“The Government should step up efforts to stimulate the economy using targeted approach to help those affected.
“Let’s not allow our people to suffer further. If businesses close down, our country’s economy will be affected and the damage may be long lasting,” he noted.
Finance Minister Datuk Seri Tengku Zafrul Aziz is scheduled to table Budget 2021 on Nov 6.
Experts have said the Budget will include measures to revive the economy, which is ravaged by the COVID-19 pandemic.
To date, the Government had announced six stimulus packages, amounting to over RM300 bil to keep the nation going while doing its best to keep the pandemic in check.
Last month, Prime Minister Tan Sri Muhyiddin Yassin attempted to persuade the Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah to proclaim an Emergency to ensure Budget 2021 is approved without the need to seek support from Dewan Rakyat.
However, the monarch rejected the proposal and urged politicians from both sides to set aside their differences and support Budget 2021, which will include measures to revive the economy and stem the COVID-19 pandemic.
Hasan, popularly known as Tok Mat, said Budget 2021 should be premised on a humanitarian angle, adding the Government should take loans from local financial institutions to avoid the economy from experiencing a K-curve recovery pattern.
A K-shaped recovery usually occurs after a recession. It involves different parts of the economy recovering at different rates, times, or magnitudes.
Usually, such a recovery will be a boost to high-income earners, while those from the middle- and low- income bracket may see little difference to their livelihoods.
It also only helps certain industries to recover, while others may see a decline.
Tok Mat also noted the effects of a K-curve recovery would be evident if the current pattern of movement control order (MCO) being enforced continues without an end soon.
“We can do away with the narrative of reducing fiscal budget for now. Let’s deal with our debt later as the people’s survival and wellbeing are more important now,” he said.
Tok Mat, a veteran banker, opined that the Government should take loans from local banks to give interest to the local bond market, through the Malaysian Government Securities and Malaysian Government Investment Issues programmes.
“Local loans will have little negative effect on the economy, considering Malaysia would not be tied to foreign regulations such as from the International Monetary Fund (IMF).
“Plus, local loans would be less exposed to the risk of fluctuating interest rates on foreign currencies or the risk of currency depreciation as these debts would be denominated in ringgit,” he remarked.
On when to deal with fiscal deficit, the Rantau state assemblyman suggested the Government can look into it in 2022, with hopes the economy would have recovered by then.
However, he cautioned the money allocated for Budget 2021 should be spent prudently in order to prevent leakages.
“Expenditures must be planned and executed with accountability and transparency, with a determination to avoid any form of leakages,” said Tok Mat. – Nov 1, 2020
