This article first appeared in The Edge Financial Daily on September 28, 2018
KUALA LUMPUR: Following financial legacy issues that was left by the previous government, many expect Budget 2019 — which will be announced this November — will be a tough challenge for the new Pakatan Harapan government to balance the rakyat’s expectations and being fiscally responsible.
Indeed, “it is going to be a very difficult budget,” said Finance Minister Lim Guan Eng in an interview with news portal MalaysiaKini published yesterday.
So much so that he believes he may end up as the most unpopular finance minister in the nation’s history because of it.
“It is likely I will end up as the most unpopular finance minister because I have no goodies to give out,” he was quoted as saying.
“So we are looking for sacrifices from Malaysians who are used to getting goodies and now, suddenly, are not getting goodies,” Guan Eng said in the interview.
These sacrifices are necessary, he said, to help trim the RM1 trillion national debt that the new government discovered it inherited after the May 9 general election, so that Malaysia can get back on track fiscally within three years.
“You have to sacrifice if you want to reduce the RM1 trillion debt. There are no two ways about it,” Guan Eng said.
In his four months as finance minister, Guan Eng has built a reputation for revealing many purported cases of misappropriation of funds by the previous government.
He brought attention, among others, to the trust fund set up for the purposes of goods and services tax (GST) refunds that he claimed to be RM19.4 billion short.
Guan Eng has likened the previous administration’s efforts to cover up these misappropriation of funds to playing musical chairs.
“It’s just like you have 10 holes but you only have nine covers, so you play musical chairs. That hole needs to be covered, so you cover it first but there is still one hole not covered, so you keep on playing that type of musical holes.
“But in the end, you will get caught because you will find that suddenly another hole has popped up and you have run out of covers,” he illustrated.
It has been made known that the removal of GST would leave a RM21 billion shortfall in the national budget. To this, Guan Eng reiterated the government’s plan to make up the difference with revenue from higher global oil prices and by refinancing, bond issuance, and asset monetisation.
“We had to fulfil that principal [election] promise [of abolishing the GST]. It was tough on us, but we had to fulfil it.
“Despite abolishing the GST, we are still able to pay Bantuan Sara Hidup (Cost of Living Aid) we are able to keep prices of petrol stable,” he pointed out.
But the going is not getting easier as the world is currently facing strong economic headwinds fuelled by the trade war between the US and other countries especially China, said Guan Eng, adding that there is also the uncertainty of a possible global recession on the horizon.
For now, however, Guan Eng said Malaysia has so far benefitted from the trade war between the two economic giants’. “We have actually received increased interest from investors … principally because Malaysia is seen as a safe harbour for both American and Chinese companies,” he explained.
Nonetheless, Malaysia may still suffer like other countries if the spat drags on for more than two years.