PRESS ROOM

Commenting on Budget 2021, REFSA's Fredrik Paulus believes it is too soon to pursue any fiscal consolidation agendas and as such, advises loosening fiscal deficit targets and the introduction of bold measures to usher in a new economic paradigm, as proposed in REFSA’s most recent Policy Brief on Budget 2021.

The government should use the next few weeks until Nov 25, when a vote is taken, to gather feedback from all and be prepared to make changes for #Budget2021. The government should be prepared to incur a larger deficit to create jobs, deal with health crises across the board, and more social protection to vulnerable groups.

Budget 2021 appears to be based on the wrong assumption that our economy will bounce back strongly in 2021. It is too soon to pursue any financial consolidation agenda and Putrajaya should instead loosen its financial deficit targets.

According to REFSA, Budget 2021 may fail to make a large impact in creating jobs and ensuring future economic growth, two key issues the pandemic has particularly highlighted. The budget could have served as a bigger catalyst for economic activity.

For decades, fiscal discipline and balanced budgets were the guiding light for finance ministers across the globe. That the institutions who were staunch defenders of this approach are now calling to abandon it is testament to the extent of the economic disruption we are witnessing. The upcoming budget is the best opportunity to start putting this new paradigm into practice.