KUALA LUMPUR, Nov 2: The government will not use fiscal deficit as the yardstick for the preparation of next year’s budget because of the impact of Covid-19, a minister told the Dewan Rakyat today.
Minister in the Prime Minister’s Department (Economic Affairs) Mustapa Mohamed said with the economic slowdown expected to lower the government’s income, Putrajaya might have to reconsider using the fiscal deficit as a benchmark this time around.
Fiscal deficit refers to the shortfall in the government’s income compared with its spending.
“Before the Covid-19 pandemic, the fiscal deficit was one of the factors when it came to the government’s ability to offer public aid.
“(But now) we need to look at new ways based on the country’s revenue which has dropped drastically,” Mustapa said in reply to a question.
He said the government needs to spend on the people even when the nation’s revenue is low and due to that, “Putrajaya has made a decision not to focus on fiscal deficit”.
Mustapa also said the government is reviewing the fiscal space – referring to the difference between debt limit and actual debt levels – as it may not be as relevant as before in fighting Covid-19.
The budget for next year is expected to be tabled on Friday.
Earlier, Saifuddin Nasution (PKR-Bandar Baharu Kulim) asked the minister to spell out any “extraordinary” plans to boost the economy following the spike in unemployment with the aviation, tourism, and arts and entertainment sectors most affected.
Saifuddin noted that Malindo will retrench 2,000 staff members, adding to the more than 700,000 Malaysians now unemployed.
“There are so many Malaysians with no income,” he added.
Mustapa acknowledged that the three sectors are facing financial problems, especially the tourism sector, with the country’s border remaining closed.
He said special focus will be placed in helping the tourism sector in the budget, especially since it had contributed up to 16% of gross domestic product (GDP) in previous years.