KUALA LUMPUR, Nov 27– It is important that the government invests in development expenditure to stimulate new growth, as allocated in Budget 2021, given that it needs to continue to provide leadership in economy.

Finance Ministry’s National Budget Office director Johan Mahmood Merican said the decision was made as the government expected the private sector to probably be a bit more dampened moving forward and looking to the government to stimulate growth.

“As we crafted Budget 2021 to be a continuity from the stimulus packages, we see that the economic situation remains quite dynamic and the government will continue to monitor the situation.

“I guess the focus is on how we learn to live with COVID-19 and at the same time, contain the outbreak of clusters but balance it with being able to let the economy open up as (far as) possible, including schools and others,” he said in his keynote address at the Post-Budget 2021 Debate webinar session here, today.

Despite some people having the opinion that the government needs to use the development expenditure to provide more assistance to the affected COVID-19 group, Johan said that the government has already done plenty of that this year and moving into 2021.

“We talk about the social assistance, Bantuan Sara Hidup (BSH) plus the Bantuan Prihatin Nasional (BPN) that we did this year, that combined, amounted to RM21 billion. Next year, there is a BPN amounting to RM6.5 billion. We feel that we have already set aside quite a lot of money for the affected (group),” he said.

He said that Budget 2021 is really focusing on the people’s well-being, but with an increasingly targeted approach, as whether the moratorium shifted from automatic to targeted B40 or those who have a reduction in their incomes, as well as Employees Provident Fund (EPF) Account 1 withdrawal.

“We don’t want to run out of bullets, and given that the COVID-19 (pandemic) is not going away in the near term, we do need to manage that balance, ensuring that we (still) have some of the bullets and to spend it where we really need it,” he said.

Johan also said Budget 2021 is very much a balancing act for the government, between the immediate and longer-term consideration, which also applies to the latest decision on the EPF Account 1 withdrawal, among others. 

“I know that there were many saying that we should forget about trying to have a target on fiscal deficit and just borrow as much as possible, which becomes popular among economists out there, but I think we are still concerned and aspire to maintain our credit rating as good as we can because we feel that there are much broader implications for the economy and for the people as a whole.

“So, on one hand, we are pushing for the largest ever expenditure (in Budget 2021) of RM322.5 billion for the year, but at the same time, we are trying to ensure that there is still moderation of the deficit to 5.4 per cent from 6.0 per cent (this year), despite the current scenario,” he added.

The government has allocated a sum of RM322.5 billion or 20.6 per cent of Gross Domestic Product for Budget 2021, an increase from its total expenditure allocation for 2020, which has been revised upwards to RM314.7 billion from the initial budget estimate of RM297 billion.

Of the total Budget 2021, RM236.5 billion (73.3 per cent) will be channelled to operating expenditure, RM69 billion (21.4 per cent) to development expenditure, and RM17 billion (5.3 per cent) to the COVID-19 fund.


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