Finance minister: Prihatin package is a short-term stimulus, not Budget 2020

A Foodpanda rider idles in front of the Masjid Jamek LRT station in Kuala Lumpur on day eight of the movement control order March 25, 2020. — Picture by Yusof Mat Isa
A Foodpanda rider idles in front of the Masjid Jamek LRT station in Kuala Lumpur on day eight of the movement control order March 25, 2020. — Picture by Yusof Mat Isa

KUALA LUMPUR, March 27 — While the new People-Centric Economic Stimulus package (Prihatin) appears to have its detractors, finance minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz has reminded them that it’s a short-term solution to a problem that no one has any idea how to fix.

Tengku Zafrul said the money for Prihatin comes from a mixture of reallocation of budgets from several ministries to those in need while adding some borrowings along the way.

“By logic, if a deficit goes up, you’re going to have to borrow money. So there will be some payoffs from various government subsidiaries and we are combining that with some borrowings.

“What’s important here is fiscal discipline. What we must not change is to continue to pay our operation expenses through funds and not borrowings,” Tengku Zafrul said during Astro Awani’s Consider This programme tonight.

“There will be a bit of reallocation within the ministries to the tune of RM2 or RM3 billion. The rest is what we already have through the government ecosystem and the remainder will be from borrowings.”

Tengku Zafrul said the biggest misconception people have when they realise the government is spending a lot of money is how they are able to get so much when the economy is reeling.

He said Malaysia’s liquidity rate is still high and there’s no issue in raising funding.

“In Budget 2020, the fiscal deficit was predicted at 3.2 per cent, but now, it’s more like 4 per cent after the outbreak.

“During the Budget, oil prices are at US$62 while now it’s US$35-40. The good thing for us is we have enough liquidity in the system to fund us domestically,” he added.

Another issue on many people's minds is what the government is doing to ensure the money reaches the right people.

For this purpose, Tengku Zafrul said the Finance Ministry has set up a team called Unit for the Implementation and Coordination of National Agencies on the Economic Stimulus Package (Laksana).

The Covid-19 outbreak has put the global economy on pause as countries shut borders and put lockdowns, curfews and quarantines in place to help curb the spread of the deadly virus.

Malaysia’s call for a movement order control (MCO) until April 14 has put the economy on hold with many households at a loss for income.

The Prihatin package, touted as a package for everyone, not just the needy, is seen by some as only having less than 15 per cent of contributions from the government to the tune of RM25 billion while the rest are subsidies.

Critics are saying this amount is not enough to sustain the people and the economy, a claim that the finance minister refutes.

“Well, this is short term and meant for three to six months. But there are a lot of initiatives within these six months.

“Also, this isn’t Budget 2020. It’s a stimulus package. All the incentives are targeting the people who need help the most and relevant business sectors,” said Tengku Zafrul.

Meanwhile, others have pointed out that this package was implemented without Parliament oversight.

When asked for his response, Tengku Zafrul said, “We can’t confuse Parliament oversight with day-to-day monitoring.

“I assure you my team Laksana is working closely with the other colleagues and ministries and the Economic Action Council.

“We report to all of them and we will do our best to get the money to the people. The key for now is to make sure the economy is moving.”


 

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