Guan Eng urges more borrowing to fix fiscal deficit as part of Budget 2021

Jerry Choong
·3-min read
Former finance minister Lim Guan Eng said the obsession with controlling the deficit to protect the country's sovereign credit ratings must give way to borrowing more money to save Malaysian jobs, businesses and livelihood. — Picture by Shafwan Zaidon
Former finance minister Lim Guan Eng said the obsession with controlling the deficit to protect the country's sovereign credit ratings must give way to borrowing more money to save Malaysian jobs, businesses and livelihood. — Picture by Shafwan Zaidon

KUALA LUMPUR, Oct 31 — Prime Minister Tan Sri Muhyiddin Yassin should ensure the government's financial focus should shift from controlling Malaysia's debt levels and fiscal deficit to borrowing more money, said former finance minister Lim Guan Eng.

He said the obsession with controlling the deficit to protect the country's sovereign credit ratings must give way to borrowing more money to save Malaysian jobs, businesses and livelihood.

“The prime minister should initiate a unity Budget 2021 consultation process with Opposition parties, that incorporate financial policies to ensure that this Budget fulfils the aspirations of the Yang di Pertuan Agong to overcome the latest spike in Covid-19 infections and help ordinary Malaysians economically,” Lim said in a statement today.

The Bagan MP said nobody would dispute that more funds should be allocated for front-liners battling the third wave infections, but financial assistance to assist economic sectors can also help to craft a unity budget that brings all Malaysians together.

“Such a unity budget must clearly and unequivocally provide a Covid-19 economic shield costing RM31.4 billion to save jobs and livelihood as well as businesses facing closure.

“A GDP contraction of 17.1 per cent in the second quarter this year and the Human Resources Minister stating that one million Malaysians are expected to be unemployed by September only underlines the economic crisis affecting ordinary working Malaysians,” he said.

Lim said the RM31.4 billion economic shield under the Unity 2021 Budget should comprise of a three-prong measures of RM1,000 monthly welfare aid including for the unemployed, automatic extension of the bank loan moratorium by another six months, as well as work hiring incentives for employers and employees.

“This RM31.4 billion is not significant compared to the RM305 billion package under KitaPrihatin, that did not appear to have the desired effect to jump-start the economy.

“First under the shield, there should be immediate implementation of the increase in monthly welfare aid from RM200-RM300 to RM1,000 promised by the Prime Minister on August 30 in Sandakan, that will cost RM12 billion. This will provide an immediate safety net for unemployed workers,” he said.

On the six-month extension of the moratorium of bank loan repayments upon expiry of the initial moratorium on September 30, Lim said the extension will cost an estimated RM6.4 billion that will help eight million Malaysian individuals and companies.

“In contrast the targeted bank loan moratorium extension and bank assistance after September 30 have assisted only 1.4 million borrowers. Many have complained that this does not benefit them but only financial institutions by merely extending the loan repayment period, thereby requiring even higher interest payments.

“Thirdly, there should be work hiring incentives over a period of two years under Malaysia@Work of RM500 a month to employees and RM300 per month to employers to encourage them to hire local workers as proposed by Pakatan Harapan in Budget 2020 last year,” he said.

Lim said expanding the scheme to cover 600,000 Malaysian workers and their employers would cost RM13 billion, and would also help over 500,000 unemployed youths who consist of a large proportion of the 4.9 per cent unemployment rate.

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