Don’t borrow anymore, just print money or open up economy, govt told
PETALING JAYA: An economist has urged the government to stop borrowing to finance cash handouts and opt instead to print money for the purpose or to reopen the economy so that people can get employed.
Geoffrey Williams of the Malaysian University of Science and Technology said the best way to look after people’s welfare was to provide them with opportunities for work with good pay.
“People don’t want handouts. They want to work and earn good incomes,” he told FMT.
He was referring to calls from former prime minister Najib Razak and others for the government to raise the statutory debt ceiling.
Najib recently suggested that the debt ceiling be raised to 65% of GDP from the current 60% to finance cash aid for people struggling under the Covid-19 pandemic.
Williams said increasing debt to provide a stimulus might be manageable as long as there was long-term growth to yield revenues that would exceed the cost of borrowing.
He said this was why it was imperative to end the lockdowns. “You can’t get growth from an economy that is in lockdown. As the extended lockdown goes on, the long-term damage cuts growth and government revenue potential.”
Last week, finance minister Tengku Zafrul Aziz said the government planned to table a motion to lift the statutory debt ceiling at the next sitting of Parliament in September.
Malaysia’s current debt is 56.8% of GDP.
Putrajaya has introduced eight stimulus packages since the start of the Covid-19 pandemic. The total cost is RM530 billion, inclusive of fiscal injection worth RM83 billion.
Another economist, Barjoyai Bardai of Universiti Tun Abdul Razak, agreed with the proposal to raise the debt ceiling.
He said there was still space to increase borrowing, but added that Putrajaya should try to get the loans through domestic means by issuing bonds.
He told FMT it would be reasonable to raise the debt ceiling to 70%, which would mean an increase of about RM162 billion.
He also suggested that the government set up an endowment fund by consolidating government-linked companies and state-owned corporations.
“The government is not poor because we have GLCs, state-owned corporations, land reserves, etcetera. If we consolidate all of these, we may have wealth of easily over RM5 trillion.
“If we start today, then we will lock all our wealth in this endowment fund and every year we can expect this fund to contribute to the government and the people,” he said. - FMT
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