Dr M cautions ballooning debt on Budget 2021

The govt will be spending a total of RM322.5b next year and this will increase debt to RM1.3t, says ex-PM


FORMER Prime Minister (PM) Tun Dr Mahathir Mohamad (picture) said the government may borrow more money to implement Budget 2021, bringing its debt to RM1.3 trillion.

“This is estimated to increase government debt to RM1.3 trillion. That is a lot of money. If you fail to service loans, you may be bankrupted,” he said in a statement yesterday.

The government will be spending a total of RM322.5 billion for the country’s operation and development next year. Additionally, Dr Mahathir said, the government has to service loans and also reduce the principals, which would need RM35 billion.

Meanwhile, total charge expenditure is RM72.3 billion or 30.6% of operating expenditure of RM236.5 billion.

Dr Mahathir said the deficit of the first Perikatan Nasional’s budget is estimated to be RM85 billion, which is higher than the development budget of RM69 billion.

He added that the government can still prune the operation and development costs.

The chairman of yet to be approved Parti Pejuang Tanah Air said it is perhaps better to make the minister and MP posts less lucrative.

“I think people earning high salaries in the government or private sector should forgo 10% of their salaries.

“It is a sacrifice, but I don’t think it would hurt them if there is a reasonable cut-off point, say RM20,000 per month,” Dr Mahathir said.

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said last Friday that the fiscal deficit for next year is projected to be 5.4% of the country’s GDP.

Dr Mahathir, however, believes the expectation of economic recovery is too optimistic.

He highlighted that two biggest contributors to government revenue, which are Petroliam Nasional Bhd and the tourism industry, are badly impacted by the Covid-19 pandemic.

“I don’t think income and corporate tax would amount to even two-thirds of the normal figures during normal times.

“The rosy picture of immediate recovery once the Covid-19 pandemic is overcome is not going to happen,” he added.

Dr Mahathir said when businesses do not do well, they would pay less tax to the government, and no taxes at all if they fail to make profits.

“Government revenue may shrink during this pandemic. But the government needs to offer stimulus packages. That costs a lot of money,” he noted.

He hopes the budget would be modified in order to become more realistic.

Pejuang said Budget 2021 is a “populist” budget, neglecting the people’s interests and the country’s direction.

“Such a large allocation to the propaganda agency Jasa is one of the symptoms that clearly put political interests above the people’s interests.

“Because of that, we see the budget presented as not appreciating the Yang di-Pertuan Agong, who puts the people’s interests above political interests,” the party said in a statement yesterday.

Pejuang hopes the aspects of the budget that are questioned by the people, economists, trade unions, analysts, NGOs and academics, among others, will be evaluated, corrected and, if necessary, cancelled.

Read our earlier report here