They said this was essential to ensure that one is not used to camouflage the other.
One of them, Carmelo Ferlito, who heads the think tank Center for Market Education, said this was important because it would also help one understand the true scale of Putrajaya’s debts.
They were responding to a remark by Titiwangsa MP Johari Ghani that the government should be more transparent with its spending, and to stop hiding its operational expenses under “development expenditure”.
He noted that the government had borrowed up to RM300 billion during the Covid-19 pandemic, in part, to procure vaccines. However, the sum had been passed off as development expenditure when it should be classified as operational expenses.
Ferlito said that by disguising operational expenditure as development expenditure, the government was making it seem as though the cost of running the country is lower than it actually is.
At the same time, it is giving the impression that it is investing in development.
Under the Financial Procedure Act, revenue is used to cover operational expenditure while borrowings are use to underwrite the cost of development.
Ferlito pointed out that it is unsustainable to use borrowed funds to finance operational expenditure.
“A business is sustainable when its running costs can be covered by its earnings. If you need to borrow to cover operational expenditures, it means your business is not going well.
“You borrow because you expect that investment to produce, over the years, an additional income that will cover the investment cost,” he said.
Universiti Malaya senior economics lecturer Goh Lim Thye said transparency in government expenditure would boost investor confidence.
“That is quite critical at the moment because without it, no matter what policy we implement, we won’t be able to successfully attract investors,” Goh told FMT Business.
“Perhaps the health ministry at that time could clear the air by providing an explanation to the public so we are aware of the rationale behind the decision.”
Former treasury secretary-general Sheriff Kassim also agreed that the government should not borrow to finance operating expenditure, describing objections to such a move as a “good point”.