Umno number two tells why budget won’t stimulate economy

SEREMBAN: Umno deputy president Mohamad Hasan said Friday’s budget tabled by Finance Minister Lim Guan Eng was not in line with the fiscal policy the government said it wanted to implement.

Mohamad said by placing the country’s fiscal position and economy at a higher risk of instability with a fiscal management that was once again tied to the global oil market, Malaysia’s economy had become less dynamic.

“The government has estimated this year’s fiscal deficit to be at 3.7% of the gross domestic product, which is much higher than the 2.8% forecast under the 2018 Budget.

“A 3.7% deficit is equivalent to RM53.3 billion, or RM13 billion higher than last year’s deficit, and is the largest deficit in the country’s history. This also means the government will continue to take on new debts,” he said in a Facebook post today.

He said the budget’s measures, incentives and initiatives did not present a clear direction for the country’s fiscal policy, and was neither organised nor visionary.

He added that the proposed fiscal policy did not give enough consideration to Malaysia’s position as a small open economy.

“The government’s fiscal policy is not taking into account rising global economic risks where the probability of a new financial crisis occurring soon is supported by the latest data.

“The government seems to think that the country’s fiscal management is only based on the domestic economic situation without considering external factors or implications on the (economic) stability and resilience,” he said.

Mohamad said there should be an urgent need for commitment towards fiscal consolidation when formulating the country’s economic policy as the external current account balance was expected to shrink.

“This can be seen as an assurance that repayment of government debt can be sourced domestically,” he said.

Mohamad said the initiatives for the people as outlined in the budget were too insignificant to stimulate the economy.

“The focus on providing a social safety net for the low-income group has been set aside for a corporate or business friendly agenda.

“Therefore, the aspiration of a ‘prosperous society’ is not significant enough to be a main theme for the 2019 Budget,” he added.