Budget 2021: Dr M says expectation of economic recovery is too optimistic

 

Former prime minister Dr Mahathir Mohamad has expressed doubt about the government's projection of economic recovery next year.

The government is expecting the Gross Domestic Product (GDP) to grow from four to 7.5 percent, but Mahathir said the expectation is "too optimistic", with government’s debt expected to be RM1.3 trillion after the borrowing to implement the budget.

"Government revenue must shrink during this pandemic. But the government needs to offer stimulus packages. That costs a lot of money.

"Additionally, the government has to service loans and also reduce the principal.

"For this, RM35 billion would be needed. Total charge expenditure is RM72.3 billion or 30.6 percent of the Operating Expenditure of RM236.5 billion.

"I must admit to being frightened. It is a behemoth of a budget, but can we raise the money to finance it? Government’s debt will be RM1.3 trillion.

"How do we pay?" Mahathir said in a statement today.

He noted that the government's revenue would shrink after businesses that are not doing well would pay less or be unable to pay taxes to the government.

He said Petronas and the tourism industry have done badly and this affects the government’s revenue.

"All other industries have suffered badly. I don’t think income and corporate tax would amount to even 2/3 of the normal figures during normal times," he said.

Mahathir warned that the economic revival would not happen as soon as the country enters 2021.

"Policies don’t grow economies. Only implementation will do so. I know of cases where multi-billion ringgit projects have been delayed for years. If the investor pushes, he is likely to face even longer delays.

"So, don’t expect restarting or launching new industries to begin on Jan 1. The rosy picture of immediate recovery once the Covid-19 pandemic is overcome is not going to happen.

"The pandemic would not end on New Year’s Day," he said.

In the Budget 2021 tabled by Finance Minister Tengku Zafrul Abdul Aziz in Parliament last Friday, the Perikatan Nasional administration projected that the country's revenue would increase to RM236.9 billion, compared to RM227.3 billion expected this year.

Analysts alike have stressed that the projection of the GDP growth to between 6.5 and 7.5 percent was unrealistic. - Mkini