The real impact on inflation due to this expansionary Budget is hard to gauge, but the expansion is necessary to maintain economic growth and wellbeing, says Ramon Navaratnam.
The Budget speech by Finance Minister Lim Guan Eng can be described as prudent and pragmatic.
It can also be called a people’s Budget. Its one of the most challenging Budgets to design, but it came out well especially for the poor.
The Budget theme is aptly described as “Credible Malaysia, dynamic economy, prosperous rakyat”. Indeed the Budget has been credible in being mildly expansionary to keep the economy moving forward rather than contractionary, which be recessionary. This Budget strategy will also sustain dynamic economic growth and higher employment.
The fiscal deficit will consequently rise to 3.4% for next year. This reflects a dynamic budget that is not bound by rigid thinking. This is commendable.
But the deficit has to be monitored closely so as not to let it expand to fast too soon to make our economy vulnerable. The increase in operational expenditure by RM259bn or 10.9% over this year and the rise of development expenditure by $55bn are bold and even daring measures which call for close supervision against corruption and previous wastage and leakages.
Property gains tax
This Property Gains Tax will help to raise revenue from those who can afford it. The excessive wealth tax is also welcome as those who are wealthy should help to provide the poor with more allocations to improve their welfare.
The Bantuan Sara Hidup is also a pragmatic measure as we cannot afford to have our poor who earn less that RM2,000 living from hand to mouth
Pensioners and minimum wages
Thus the increase in pensions is laudable although the increase of just another RM50 in the minimum wage will be disappointing. But more could be given when our productivity hopefully rises.
Budget 2018 has been challenging to prepare – but the outcome has been pragmatic and people-oriented.
We don’t know the real impact on inflation due to this expansionary Budget. But the expansion is necessary to maintain economic growth and wellbeing.
The Budget focus has been on enhancing the welfare of the bottom 40% of the population, and this is good. It has provided for more affordable housing too – and all these measures strengthen the notion of a people’s Budget or a rewarding Budget in return for the people’s support at the 2018 general election.
I only hope that fiscal and financial integrity is enhanced in the implementation of this good Budget.
Tan Sri Ramon Navaratnam, an Aliran member, is chairman of the Asli Center of Public Policy Studies.