PETALING JAYA: DAP secretary-general Lim Guan Eng today said the finance ministry’s lack of spending in next year’s budget has put the country in an awkward position.
He said Malaysia was not spending enough to help the people but also failing to impress credit rating agencies with its fiscal consolidation.
In a statement, the Bagan MP and former finance minister called it “the worst of both worlds,” coming after Fitch Ratings downgraded Malaysia’s sovereign rating from “A-” to “BBB+,” which will increase the cost of future borrowings.
“Instead of spending more through borrowings to encourage economic growth and save jobs, businesses and livelihoods, the finance ministry has chosen to spend less next year to safeguard our sovereign credit ratings,” he said, adding that this clearly did not have the intended effect given Fitch Ratings’ downgrade.
“This has put the Malaysian economy in the ‘worst of both worlds’ situation of not spending enough next year for the people, but still not convincing the independent ratings experts of the sterling quality of our country’s credit-worthiness.”
Lim said the government should be spending and borrowing more to save jobs, businesses and livelihoods, and called for action from Prime Minister Muhyiddin Yassin.
“He should set a course correction and spend an additional RM45 billion next year to protect economic growth, the same amount as he spent in this year’s stimulus package.”
He said political instability puts Malaysia at risk of further downgrades in the future, and Muhyiddin must prioritise economic recovery over his political survival.
The prime minister, he said, must also allow the motion of no-confidence in him to be tabled “to address concerns over political instability” raised by Fitch Ratings.
The US ratings agency has also downgraded the international credit ratings for Petronas and Telekom Malaysia Bhd from “A-” to “BBB+”, which Lim said “is the price to be paid by Malaysian companies for Malaysia’s downgrade, together with the accompanying loss of investor confidence”.