Research for Social Advancement said the statement has misinterpreted the term “government spending” and overstated the fiscal burden on the state coffers.
Researcher Jaideep Singh said the RM40 billion in withdrawals from the Employees Provident Fund was not a fiscal stimulus as it had come from the contributors’ own savings.
“For other macro-financial measures, support typically comes from Bank Negara, which does not rely on government money and therefore does not directly affect the country’s fiscal deficit,” he said in a statement.
Jaideep said the finance ministry itself had admitted that only about RM72.6 billion, or 21.4%, of the total RM340 billion figure took the form of direct government expenditure through fiscal injections.
“This figure covers health spending, cash transfers, the Wage Subsidy Programme and infrastructure spending, which are all borne out of the government’s budget,” he said.
He said the actual amount of government spending to date was likely to be even lower than the RM72.6 billion previously announced by the finance ministry, since not all fiscal injections were immediate.
“There is a time lag between the announcement of fiscal policy measures and the eventual disbursement of funds,” he said.
The remaining RM267.4 billion, he said, covered a range of strategic, operational and monetary policy measures, including loan moratorium extensions, tax exemptions, loan guarantees and financing schemes.
“Some of these, such as tax relief, do not have a direct accounting value apart from the opportunity cost of tax money foregone, which is likely to be negligible for affected sectors anyway.”
He also argued that higher spending due to the stimulus measures was not unprecedented, citing the 2009 budget, which had a fiscal deficit of 6.7% amid the financial crisis.
Jaideep said now was not the time for alarmist claims, adding that the country can already expect an increase in government revenue beyond the 2021 budget’s forecast, with recent hikes in oil prices.
He said the most recent Pemerkasa package had also suggested that the government still had fiscal space to introduce substantial new injections.
“Ultimately, the way out of the pandemic-induced contraction is to implement more directed, strategic expansionary fiscal policy measures to promote consumption and crowd-in private sector investment, not to make unsubstantiated claims about the government’s fiscal situation,” he said.