pic by BERNAMA
THE government will fund the additional items announced in Budget 2021 through a rearrangement of the expenditure allocation.
National Budget Office director Johan Mahmood Merican (picture) said the Finance Ministry (MoF) will ensure that government’s spending will be kept within the proposed RM322.5 billion.
“The new measures announced by MoF last Thursday, have an implication of RM500 million and much of the measures will be funded through reprioritising the expenditure.
“The ministry plans to keep the total allocation for next year within RM322.5 billion,” he said during a virtual 2021 Post-budget Debate organised by Malaysian Economic Association last week.
Among the new measures announced are allowing all contributors to the Employees Provident Fund (EPF) who are affected by the pandemic to withdraw up to RM10,000 from their Account 1, a one-off Covid-19 bonus to more frontliners and an increase of the one-off RM50 e-wallet credit to RM100.
Johan said Budget 2021 is emphasising Malaysia’s economic recovery including individuals’ personal financial recovery through increasing targeted approaches.
“The budget focuses on people’s wellbeing as a whole, at the same time introducing more targeted approaches, such as the moratorium shifting from automatic to targeted at bottom 40% income group and those who are experiencing salary cuts.
“The tourism and retail sectors are badly affected, hence the assistance for them is imperative, and that would be through the wage subsidy and levy exemption.
“However, we do not want to run out of bullets given the Covid-19 situation. We need to ensure we keep some of the bullets and use it when we really need them,” he said.
Johan said while next year’s allocation is focusing on direct stimulus and financial assistance, the government will be balancing the measures with investment to provide support to the country’s growth.
“It is very much a balancing act between the immediate and longer-term considerations such as the EPF’s withdrawal against stimulating new growth.
“The expenditure for development has been significantly increased for 2021 and we already put aside quite a lot for cash assistance.
“It is really important for Malaysia to invest to stimulate new growth given that the government needs to continue providing leadership in the economy and support the private sector, which currently looks a bit dampened,” he added.
As the government is focusing on recovery measures to revitalise the economy, Malaysia’s fiscal deficit will be eased to 5.4% in 2021 from 6% this year as an attempt to have fiscal consolidation amid the current scenario, Johan said.
“Some quarters said we should ignore the fiscal deficit and borrow as much as possible, but the ministry is concerned and aspires to maintain our credit ratings as much as we can.
“However, we still have to borrow and manage our deficit within a certain range and we have taken a view on balancing the consideration and need to stimulate the economy at the same time and also exercise some fiscal prudence.
“On one hand, we are pushing for expansion for next year to show that there is moderation in the deficit from 6% to 5.4%,” he explained.