A THINK-TANK has rubbished Prime Minister Muhyiddin Yassin’s recent remarks that the government is lacking funds after allocating over RM600 billion for Budget 2021 and various stimulus packages.

The Institute for Democracy and Economic Affairs (Ideas) said Muhyiddin’s remarks on the matter was a misrepresentation, as the funds did not come directly from the government coffers.

Ideas chief executive officer Tricia Yeoh said Muhyiddin’s remarks about the apparent insolvency of Malaysia was concerning.

“Not only is it a misrepresentation of how Malaysia financed its various fiscal responses to the Covid-19 pandemic, it may also affect international investors’ perceptions of the country at a time when attracting FDI is more important than ever.

“As well, his comments may potentially negatively impact the government’s debt servicing abilities, as investors may begin to question Malaysia’s ability to meet its debt obligations,” Yeoh said in a statement today.

She added that research conducted by Ideas showed that only 23% or RM79 billion, of the RM340 billion worth of stimulus packages passed came directly from the government.

From that, only RM65 billion, or approximately 20% of the total stimulus package, were direct expenditures while only RM1 billion were direct revenue losses to the government balance sheet as a result of payment exemptions.

Yeoh said that to avoid raising the debt-to-GDP ratio, the government has utilised a variety of stimulus policies beyond expenditure, such as liquidity provisions and deferrals.

She said the government has also relied on its vast ecosystem including its statutory bodies, development finance institutes and social security agencies to avoid taking funds directly from its own balance sheets.

Most notably, she said, Putrajaya relied a lot on the Employees Provident Fund (EPF) through programmes such as the reduction in EPF contributions and I-Lestari, with these two programmes alone relying mostly on taking money out of employee retirement funds and which make up around 15% of the total stimulus package.

Speaking at a Sikh community event yesterday, Muhyiddin said Putrajaya has run out of funds after its allocations for budget and several stimulus packages to help Malaysians affected by Covid-19.

“So much money has been spent last year and this year. Why? For Covid-19. This included various stimulus packages totalling RM340 billion and RM322 billion allocation for the national budget.

“I went to school, but I am not good at calculation… how much it adds up… it’s more than RM600 billion – that’s a big sum of money.

“What I am trying to say here is, we don’t have much money left,” he was quoted as saying at the event where he pledged RM4 million to the Sikh community for this year.

“We don’t have as much (money) as before, because the most important thing for us is to ensure our livelihood; we should be able to manage ourselves better,” Muhyiddin said. – April 14, 2021.