KUALA LUMPUR (October 7): The Center for Socio-Economic Research (SERC) calls for a pro-growth and transformational 2022 budget by moving from a broad approach to a targeted approach to expansionary budget spending, according to its executive director, Lee Heng Guie.
Speaking in a virtual press conference Thursday, Lee said budget 2022 priorities must be set to continue protecting Malaysia from the flu-like Covid-19 endemic, speeding up recovery and reconstruction after the deep economic scars.
“Policymakers must figure out how to mend a shattered economy, rebuild from the damage of the pandemic to become more resilient and protect it against the next disaster.
“The immediate priority is to develop a rapid economic recovery plan to generate growth, strengthen economic resilience, revitalize private investment, create jobs as well as retrain and improve the skills of the workforce”, did he declare.
At the same time, the SERC estimated an overall budget deficit of between 5.5% and 6.0% of gross domestic product (GDP) in 2022. For 2021, the government has forecast that its budget deficit will fall between 6.5% and 7%. % of GDP, taking into account the budgetary expenditure necessary to support the reopening of the economy. The government’s budget deficit reached 6% of GDP in 2020, the biggest gap since the global financial crisis of 2009.
The government has also proposed to increase its debt ceiling to 65% of GDP, from 60% to allow fiscal space to deal with emergency spending to support a more solid recovery.
“Budget spending and actions must be integrated into a credible medium-term fiscal stability framework to ensure that the budget deficit and debt remain sustainable,” Lee said.
He also stressed that the Covid-19 Special Fund is expected to be lower due to a lower allocation as well as some non-recurrence of large one-off financial assistance programs in 2020-2021.
“The government must restore and maintain public trust through four strong pillars: communication, integrity, transparency and engagement.
“The government should also support the reallocation of labor and capital to growing sectors through targeted hiring subsidies, job creation, and retraining and funding mechanisms,” said he added.
The 2022 budget is expected to be tabled on October 29 and should address the long-term effects of the pandemic on public health and the economy.
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