KUALA LUMPUR: The government has unveiled eight economic packages worth RM530 billion in total to address the crisis ever since the COVID-19 pandemic was declared last year, Asia Analytica said.
The research and institutional services said since then, however, many have expressed their grouses on insufficient support given to the rakyat although the amount was huge.
“Many have compared our schemes with those in the United States, the United Kingdom or Singapore, which have been far more generous,” it said in a report published by The Edge Malaysia.
It said to be fair, the government has entered the crisis on a weak financing footing, following decades of financial scandals, overspending, over-borrowing and financial imprudence under previous governments.
“We have had so many financial scandals and weak fiscal management in the past that the country’s financial resources had been severely sapped even before COVID-19 hit our shores,” it said.
It said the government could not afford to spend aggressively like other countries with strong balance sheets as doing so would put the country’s fiscal position, financial standing, currency and inflation, among others, at more risk of dire consequences.
Asia Analytica said the government debt grew 1.4 times faster than income, in which its debt and guarantees grew at a compound annual growth rate (CAGR) of 10 per cent from 2008 to 2020, outpacing nominal gross domestic product’s CAGR of just 5.2 per cent.
Thus, it said the government debt grew at twice the rate of its income during the period.
Nevertheless, it said the government has cleverly crafted a blanket country-wide, all-encompassing six-month loan moratorium from April to October 2020, for all individuals as well as big and small businesses.
It said the moratorium effectively restructure the entire debt portfolio of all individuals and businesses in Malaysia, extending their obligations and providing a lifeline for individuals and businesses by providing much-needed liquidity to face a major unprecedented global crisis.
“Liquidity and cash flows are the critical lifelines to help one ride through any crisis. Yes, detractors can argue that loans are only deferred and will still need to be repaid and they don’t address the loss in income,” it said.
It said the two blanket loan moratoriums, six months under PRIHATIN and another six months under the National People’s Well-Being and Economic Recovery Package (PEMULIH), are crucial since Malaysian households are highly indebted and most low-to-medium income households have minimal discretionary income left after loan repayments.
Asia Analytica said it estimated that a total of RM4,400 one-off grants have also been provided to households as well as deferments of education loans, public housing rents and electricity rebates.
“The government has already given out a whopping RM83 billion in cash handouts. Giving out billions more as some have demanded may be popular and would help win elections but it would be highly reckless and irresponsible,” it said.
It added that the strategy to restructure both corporate and individual debts via loan moratoriums was the more prudent and responsible route to take and has been effective in helping with cash flows for many in the past 16 months.