Why does Lim Guan Eng believe RM45 billion boost is needed for Budget 2021?

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Lim Guan Eng Advocates for an Additional RM45 Billion Injection into Budget 2021 to Counter Economic Headwinds

Former finance minister Lim Guan Eng has proposed a substantial RM45 billion injection into Malaysia's Budget 2021, arguing that the government's projected 7.5% GDP growth for the upcoming year is unrealistic. This call stems from concerns over the sluggish global economic recovery, exacerbated by new waves of Covid-19 infections worldwide, and a significant 11.6% contraction in the country's gross fixed capital formation. Lim suggests that this additional funding, representing a 4% deficit to GDP, should be strategically allocated to social protection, job creation, business support, and crucial investments in new technology and education.
Concerns Over Unrealistic Growth Projections and Economic Contraction

Lim Guan Eng has expressed skepticism regarding the government's optimistic forecast of 7.5% GDP growth for 2021. He points to the prevailing global economic climate, marked by resurgent Covid-19 cases, as a significant impediment to achieving such growth. Furthermore, a 11.6% contraction in gross fixed capital formation is seen as a direct drag on the local economy's potential growth and competitiveness, making the official projection appear untenable.
Proposed Allocation for Economic Support and Future Investment

The proposed RM45 billion injection is intended to address immediate economic pressures while also laying the groundwork for future resilience. Key areas for this funding include enhancing social protection measures, stimulating job creation, providing essential support to businesses, and investing in the modernization of education and the adoption of new technologies. Lim advocates for a shift in fiscal strategy, prioritizing borrowing to safeguard jobs and livelihoods over an exclusive focus on debt control.
Specific Measures to Mitigate Hardship and Stimulate Employment

To implement this economic boost, Lim has outlined several specific measures. These include a significant increase in monthly welfare aid from RM200/RM300 to RM1,000 for the unemployed, estimated to cost RM12 billion. He also calls for the reintroduction of a blanket six-month bank loan moratorium from September 30, which could benefit approximately eight million Malaysians and is projected to cost RM6.4 billion. Additionally, RM13 billion is proposed for the Malaysia@Work hiring incentive programme over two years, aiming to support the employment of over 500,000 unemployed youths.
Investment in Education and Lifelines for Struggling Businesses

Beyond immediate relief, Lim's proposal includes a RM4 billion allocation to digitize the education system, facilitating online learning through the purchase of laptops. Recognizing the severe impact on various sectors, a further RM10 billion is earmarked as financial lifelines, in the form of loans or credit extensions, for companies facing difficulties. This is particularly aimed at the tourism industry, where the Malaysian Budget Hotel Association has projected that up to 40% of hotels could face closure without intervention, potentially leading to job losses for around 2,000 staff.

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Why does Lim Guan Eng believe RM45 billion boost is needed for Budget 2021?

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