MALAYSIANS will have to bear more financial pain unless Prime Minister Ismail Sabri Yaakob replaces failed economic managers and inflation fighters, Lim Guan Eng said. 

The DAP chairman said the failures of economic minister Mustapa Mohamad and Special Task Force on Jihad Against Inflation chairman Annuar Musa have led to the rise in the Overnight Policy Rate (OPR). 

“Mustapa’s failure in managing the economy and Annuar’s failure to check inflation have caused Bank Negara Malaysia (BNM) to raise the OPR resulting in borrowers having to pay higher interest costs,” he said in a statement.

On September 8, BNM raised its OPR by 25 basis points to 2.5%.

This is the third consecutive rate hike announced by the central bank.

It raised the OPR to 2% from 1.75% in May. In July, it was by another 25 basis points to 2.25%.

Lim said since the increase in OPR to 2.5% was made before the latest August inflation data was available, BNM is expected to increase the OPR further by November this year and January next year to 3%.

“Thereby imposing heavier financial burden on Malaysians and businesses.” 

The Bagan MP said that Mustapa’s indifference towards the financial difficulties borne by the people from the rise in Malaysia’s annual inflation rate is disappointing. 

He pointed out that inflation rose to a 16-month high of 4.7% in August 2022 from 4.4% in July, while food inflation rose by 7.2% in August compared to 6.9% in July.

“It is as disappointing as the government’s poor economic management.

“Annuar irresponsibly dismissed the current decline in the value of the ringgit against the US dollar as only temporary.”

Lim questioned Annuar on how the decline can be temporary when the ringgit has dropped to a new 24-year low of RM4.58 today against the US dollar.

“The current decline of value of the ringgit against the USD is not temporary as the Ringgit has weakened by almost 10% this year from RM4.17 at the end of 2021.

“Malaysians are forced to pay higher import costs and the government is repaying higher for US-denominated loans, especially the US$6.5 billion 1MDB loans, which are definitely not temporary in nature as the losses cannot be recouped.”

He added that Annuar is wrong to imply that the decline in the value of the ringgit is principally against the US dollar, when the ringgit has also declined against the country’s two other major trading partners, Singapore and Indonesia.

“Against the Singapore dollar, the ringgit has recently dipped to a historic low of RM3.26 while the Indonesian rupiah has appreciated by more than 4% this year against the ringgit.

“Is dismissing the depreciating ringgit as temporary a feeble excuse not to do anything because the government simply does not know what to or is too lazy to heed suggestions of carrying out structural economic reforms?”

Lim also said that BNM governor Nor Shamsiah Mohd Yunus said yesterday that rather than resorting to capital controls or re-pegging the ringgit, the policy priority now is to sustain economic growth in an environment of price stability and to further strengthen domestic economic fundamentals through structural reforms. 

This, she said, will provide a more enduring support for the ringgit. – September 24, 2022.