KUALA LUMPUR, March 24 — The Malaysian Institute of Economic Research (MIER) has proposed that the government set aside an extraordinary crisis budget of RM95 billion to mitigate the economic impact of Covid-19.
MIER said this is an additional RM75 billion on top of the RM20 billion stimulus package announced earlier.
Such an allocation is imperative especially to avoid company bankruptcies, loss of jobs, and impaired household incomes and welfare through business support, SME rejuvenation and social safety net programmes, it said.
The research group added that it is also important to revisit the country’s overall socio-economic goals.
“Given the pandemic, we think it is now timely to establish policies, mechanisms and measures to move the economy towards resiliency and genuine prosperity, not unsustainable growth-oriented policies of the many past decades.
“It is also timely to revisit thoroughly the state of our agriculture, we need to move on to food-based agriculture, especially in light of the nation’s food security and sovereignty,” MIER said in a statement today.
The list of proposals to mitigate the economic effects was published following a second study by MIER on the economic impact of the Covid-19 pandemic.
It had earlier estimated that the overall economic impact of the outbreak on GDP growth was a reduction of between 0.8 per cent and 2.0 per cent from the baseline trend for the low and high scenarios.
MIER said it strongly recommends that the government consider establishing a National Food and Medical Supplies Stockpile funded by the government or in conjunction with the private sector through a Public-Private Partnership (PPP) programme.
The government also has to review its fiscal policy including Budget 2020 that was announced by the previous government in order to deal with this new development, it said.
MIER said it expects a V-shaped recovery from this year’s projected economic recession due to the Covid-19 outbreak and implementation of the recommended stimulus package, adding that the year 2021 would see the economy perform better.
In anticipation of this, MIER called on the government to reconsider bringing back the GST with appropriate adjustments to its rate and coverage as well as an improved mechanism in terms of collections and rebates in its forthcoming 2021 budget.
This should provide a means to cover any shortfall in federal government revenues due to the lower expected oil receipts in the previous assessment, MIER said. — Bernama