KUALA LUMPUR, March 28 — In the administration of a country, any government should mobilise funds from various sources to stimulate economic growth besides relying on direct fiscal injection from the federal government’s budget, explained Tan Sri Abdul Wahid Omar.
The former Minister in the Prime Minister’s Department said this includes funds from government agencies, government-linked companies and the private sector.
Moreover, about two-thirds of the country’s economy is now driven by the private sector, said the former corporate figure in a statement here. He was the president and chief executive officer of Malayan Banking Berhad from May 2008 until June 2013.
Abdul Wahid said this in response to reactions by various quarters to Prime Minister Tan Sri Muhyiddin Yassin’s Prihatin Rakyat Economic Stimulus Package 2020 (PRIHATIN) announcement yesterday.
Some quarters are disputing the RM250 billion government’s aid package as the direct fiscal injection only amounted to RM25 billion.
In an announcement thoroughly welcomed by the rakyat, Muhyiddin dished out an RM250 billion stimulus package, comprising of RM20 billion from the previous economic aid and an additional RM230 billion.
Out of RM230 billion, RM22 billion would come from the direct fiscal injection, RM100 billion (moratorium in loan repayments), RM55 billion (guarantees), RM40 billion (withdrawal from Employees Provident Fund) and RM13 billion (various sources).
This brings out the total amount of direct fiscal injections to RM25 billion, 1.6 per cent of Gross Domestic Product (GDP) at the current rate.
According to Abdul Wahid, the additional RM25 billion in direct fiscal injection would increase the country’s fiscal deficit to RM99 billion or 6.2 per cent from the GDP.
However, the former minister said he was aware that there are a number of measures to increase the government’s revenue and reduce operating expenses that could see the country’s fiscal deficit lowered to RM74 billion or 4.6 per cent of GDP.
“This 4.6 per cent deficit of the GDP is lower than the 6.7 per cent deficit recorded in 2009 when Malaysia was facing the global financial crisis,” he said.
This he said, is in line with the Prime Minister’s statement that the government would ensure the sustainability of the country’s fiscal and debt position and re-implement fiscal consolidation measures in the medium term to create long-term fiscal space.
“Deficit of below five per cent will ease the pressure on Malaysia’s international credit rating of A3 / A-. It will also give the government more space to implement additional measures should the Covid-19 outbreak extend beyond six months,” he said.
Overall, the Prihatin Rakyat stimulus package was aimed at protecting the people, supporting businesses and strengthening the economy that coincided with the extremely difficult, unpredictable and unprecedented situation.
“Let us build and play our part together in addressing this global crisis that threatens our life, lives and well-being,” Abdul Wahid said. — Bernama