The Malaysian Insight

PEKAN MP Najib Razak today blamed the Pakatan Harapan and Muhyiddin Yassin’s Perikatan Nasional administrations for the worrying state of the country’s finances.

“This is the biggest Budget in the country’s history. With a high deficit, it is also very risky as the government has to increase its borrowing when its revenue projection is low,” he said while debating Budget 2022 in the Dewan Rakyat today.

“To me, this happened due to a series of (wrong) decisions and missteps taken by the governments formed after the 14th general election (GE14).”

Increasing dependence on petroleum revenue, terrifying investors with the rhetoric that the country has gone bankrupt and jeopardising the country’s long-term future for a short-term gain via the sale of key national assets were among the mistakes pointed out by the former prime minister.

He noted that the national debt-to-gross domestic product ratio was on the decline for eight consecutive years to 48.7% under his administration.

However, the national debt levels have been increasing after his successors took over with the statutory debt limit being revised twice.

“The fiscal deficit and debt levels would have been higher if it is not cushioned by the ‘exorbitant’ dividends taken from Petronas since GE14,” he said.

He said the national oil company has been squeezed to pay dividends, which are higher than its profit margin. This will also eventually lead to Petronas depleting its reserves and assets.

In addition to that, he said, the company’s assets have been sold, its credit rating downgraded by rating agencies, and its liabilities have increased significantly.

“This means the government cannot be fully dependent on Petronas to fund its spending in the future, thus depriving the government an important source of revenue while also affecting Petronas’ chances to explore for new oil fields to replace its depleting reserves,” he said.

Najib said the abolition of the Goods and Services Tax (GST) was another wrong move, adding that countries such as Saudi Arabia, Indonesia and Singapore are in the midst of increasing the tax rate.

“In Malaysia, the half-baked lockdown, which is among the longest in the world implemented by the former government’s ‘Bapa Lockdown’ (Father of Lockdown) has left the finances and lives of the people in shambles,” he said, while alluding to former prime minister Muhyiddin.

He said despite the prolonged movement curbs, Malaysia’s Covid-19 cases and deaths were among the highest in the region.

“Although some said they have spent RM600 billion in one-and-a-half years, it did not yield the desired benefits to the people. That is why the Malaysian government’s finances are in a critical state,” he said.

Najib said while he is not playing the blame game, the aforesaid decisions have forced the current government to borrow and grapple with a high fiscal deficit to come up with the mammoth RM332.1 billion budget, which was announced on Friday. – November 1, 2021.