Should Malaysia prioritise borrowing over fiscal deficit control?

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Malaysia Should Prioritise Borrowing Over Fiscal Deficit Control, According to Former Finance Minister

Former finance minister Lim Guan Eng has asserted that Malaysia should shift its financial strategy from controlling debt levels and the fiscal deficit to prioritising increased borrowing. This approach, he argues, is necessary to safeguard jobs, businesses, and livelihoods amidst the ongoing economic challenges posed by the Covid-19 pandemic. Lim suggests that the government's current preoccupation with maintaining sovereign credit ratings by controlling the deficit is detrimental to immediate economic relief efforts.
Proposed Covid-19 Economic Shield

Lim Guan Eng has put forth a proposal for a comprehensive "Covid-19 economic shield" estimated to cost RM31.4 billion. This financial package is designed to protect jobs, sustain livelihoods, and prevent businesses from closing down. He highlighted that this proposed expenditure is relatively modest when compared to the RM305 billion KitaPrihatin package, which he believes did not yield the desired economic stimulus.
Components of the Economic Shield

The proposed economic shield comprises three key measures. Firstly, it advocates for an increase in monthly welfare aid for the unemployed and other vulnerable groups to RM1,000, an initiative he estimates would cost RM12 billion and provide a crucial safety net. Secondly, Lim calls for an automatic six-month extension of the bank loan moratorium, a measure he calculates would cost RM6.4 billion and benefit approximately eight million Malaysian individuals and companies.
Incentives for Employment

The third component of the proposed shield involves work hiring incentives under the Malaysia@Work initiative. This scheme would offer RM500 per month to employees and RM300 per month to employers for a period of two years, aimed at encouraging the hiring of local workers. The estimated cost for this incentive programme is RM13 billion, projected to support 600,000 workers and employers, and specifically assist over 500,000 unemployed youths. Lim also suggested that the government should engage in consultations for Budget 2021 with Opposition parties to incorporate financial policies that address both the Covid-19 pandemic and economic hardship.

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Should Malaysia prioritise borrowing over fiscal deficit control?

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