KUALA LUMPUR, Dec 9 — The federal government should have spent and borrowed more to save jobs, businesses and livelihoods next year, said DAP secretary-general Lim Guan Eng.
The Bagan MP, who was also the finance minister in the Pakatan Harapan government, said the country’s sovereign credit rating is “beyond salvation” because Prime Minister Tan Sri Muhyiddin Yassin had failed to address concerns of political instability and poor governance.
“He should set a course correction and spend an additional RM45 billion next year to protect economic growth, the same amount as he spent in this year’s stimulus package,” Lim said in a statement today.
He also said the Fitch Ratings decision to downgrade both Petroliam Nasional Bhd’s (Petronas) and Telekom Malaysia Bhd international credit ratings is the consequence of Malaysia’s sovereign credit ratings downgrade from ‘A-‘ to ‘BBB+’.
“This is the price to be paid by Malaysian companies for Malaysia’s downgrade, together with the accompanying loss of investor confidence,” he said.
He warned that Malaysians will pay an even higher price if the prime minister continues to dismiss the two principal concerns mentioned by Fitch, namely political instability and poor governance standards and transparency.
He said Muhyiddin should stop sacrificing national interests by refusing to allow a motion of no-confidence in Parliament to disprove popular belief that he has lost his parliamentary majority.
“The prime minister should also stop the practice of buying political support by offering political posts of directors and chairman of Government-Linked Corporations (GLCs),” he said.
He pointed out that Gua Musang MP Tengku Razaleigh Hamzah had ironically rejected the Petronas chairman post he was offered as he had deemed it unconstitutional.
Lim warned that Muhyiddin’s continued moves in choosing personal political survival will further risk future sovereign credit ratings downgrades.
“If the prime minister still refuses to heed Fitch’s twin concerns, then the Finance Ministry’s attempt to address the escalating government debt through fiscal consolidation next year will be doomed to fail,” he claimed.
He said the government’s total debt and liability exposures are estimated to be RM1.257 trillion, or 87.3 per cent of the gross domestic product (GDP), as at the end of September 2020.
He claimed that this is much higher than that recorded during the Pakatan Harapan government’s governance.
“Federal debt as at end-September amounted to RM874.3 billion or 60.7 per cent of GDP,”
“However, the Finance Ministry has cleverly used statutory limit calculations on the federal debt to be set at 56.6 per cent of the GDP, which is less than the 60 per cent limit set recently,” he said.
Lim said this year’s deficit had increased to 6 per cent of GDP and fiscal consolidation measures next year will reduce the deficit to 5.4 per cent.
“Instead of spending more through borrowings to encourage economic growth and save jobs, businesses and livelihoods, the Finance Ministry has chosen to spend less next year to safeguard our sovereign credit ratings,” he said,
He said fiscal consolidation measures for next year have put the Malaysian economy in the “worst of both worlds”.