Finance Ministry: Budget 2022 for entire ‘Keluarga Malaysia’, to be drafted with economic recovery in mind

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A man walks past a ‘Malaysia Prihatin’ wall decoration in Kuala Lumpur August 25, 2021. In giving a preview of Budget 2022’s direction and approach, the ministry said it aims to ensure that those impacted by the extended movement control orders or restrictions imposed to curb Covid-19 will receive government support. — Picture by Ahmad Zamzahuri
A man walks past a ‘Malaysia Prihatin’ wall decoration in Kuala Lumpur August 25, 2021. In giving a preview of Budget 2022’s direction and approach, the ministry said it aims to ensure that those impacted by the extended movement control orders or restrictions imposed to curb Covid-19 will receive government support. — Picture by Ahmad Zamzahuri

KUALA LUMPUR, Aug 31 — The Malaysian government’s Budget 2022 will be drafted with an inclusive approach in the “Keluarga Malaysia” spirit, and will work to ensure that no one is left behind in receiving government aid, the Finance Ministry said today.

In its historic Pre-Budget Statement (PBS) published two months ahead of the Budget 2022’s October 29 tabling, the ministry said the three themes of next year’s government Budget are in line with expected economic recovery in 2022.

“Overall, Budget 2022 will be drafted with the expectation that the economic situation will recover from the effects of the Covid-19 pandemic next year,” the ministry said in the 19-page PBS.

“As such, Budget 2022 will focus primarily on continuing to protect and restore the lives and livelihoods of the people and businesses, rebuild national resilience and catalyse post-pandemic reforms,” it said, referring to the three objectives or themes of Budget 2022.

In giving a preview of Budget 2022’s direction and approach, the ministry said it aims to ensure that those impacted by the extended movement control orders (MCO) or restrictions imposed to curb Covid-19 will receive government support.

“This Budget will strive to ensure that no person or business is left behind in receiving the Government’s assistance and support, especially those severely affected by the prolonged MCO in 2021,” it said.

“In addition, this Budget also serves as a catalyst towards implementation of the 12MP that will drive economic growth, inclusiveness and sustainability in the medium term, based on the SDGs and SPV2030,” the ministry said, referring to the government’s upcoming five-year blueprint 12th Malaysia Plan (12MP) for 2021 to 2025 and the United Nations’ Sustainable Development Goals (SDGs) and Malaysia’s Shared Prosperity Vision 2030 (SPV 2030).

“The government will undertake various engagement and consultation sessions to obtain input and suggestions from various parties to ensure that the drafted Budget is comprehensive and inclusive in line with ‘Keluarga Malaysia’ spirit,” the ministry said.

The ministry also expressed the government’s hope that the publication of the PBS would assist in setting the public’s expectation of Budget 2022.

The 12th Malaysia Plan is expected to be tabled in the Dewan Rakyat on September 27, while Budget 2022 is expected to be tabled in the Dewan Rakyat on October 29.

Earlier in the PBS, the Finance Ministry had among other things noted the International Monetary Fund’s (IMF) projection of the global economy to recover from a contraction of 3.2 per cent in 2020 due to the Covid-19 pandemic, with a projected bounce back to a positive growth at 6.0 per cent in 2021 and further growth by 4.9 per cent in 2022.

“Global economic growth in 2022 is projected to expand further by 4.9 per cent, driven by broader coverage of vaccinations globally that enables the reopening of economic sectors as well as the recovery of global trade and supply chains,” the ministry noted.

As for Malaysia, its economic growth for 2021 was originally forecasted in March to range between 6.0 per cent and 7.5 per cent, but this has been revised down by Bank Negara Malaysia on August 13 to a projected rate of between 3.0 per cent and 4.0 per cent.

The Finance Ministry noted that the revised 2021 economic growth rate for Malaysia despite impact from movement control order measures is based on the anticipated reopening of all economic and social sectors in the fourth quarter spurred on by the country’s Covid-19 vaccination progress, and the expected resulting positive business and consumer sentiments.

“Other factors which are expected to support Malaysia’s economic recovery include increased external demand particularly from major trading partners, the recovery in commodity prices, the transition to digitalisation as well as the implementation of infrastructure projects with high multiplier effects.

“Overall, all major sectors of the economy are expected to register positive growth in 2021 except for the construction and tourism sectors as a result of the containment measures put in place to curb the spread of Covid-19,” the ministry said.

The Finance Ministry said Malaysia’s trend of economic recovery is projected to continue well into 2022.

“The IMF and World Bank forecasted the Malaysian economy in 2022 to expand by 6.0% and 5.0%, respectively, a return to the pre-pandemic annual GDP growth trend,” it said.

The ministry noted expected positive economic growth drivers such as the services and manufacturing sectors, infrastructure projects with high multiplier effects that will support investment sentiment, and continued increase in external demand and recovery in commodity prices.

“The greater impetus in economic activity will revive consumer sentiment due to improved earnings prospects. As a result, the labour market is expected to recover in 2022 albeit at a more modest level than the pre-pandemic period, in tandem with the reopening of the economic sectors following the achievement of herd immunity.

“However, there are still some downside risks to the country’s economic growth prospects, among others the emergence of new Covid-19 variants that could impinge on the health system capacity and compel the government to extend movement control measures that would further postpone the opening up of economic sectors, a slower labour market recovery as well as policy uncertainties that could affect investment sentiment,” it said in outlining the economic outlook for Malaysia.

The full PBS can be found here on the Finance Ministry’s website.

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