Economists look at how to finance higher welfare aid

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With the national debt already at 59% of GDP, the government may not have sufficient revenue. FMTNews WelfareAid Malaysia

With the raised poverty line, more Malaysians now qualify for welfare aid.

Revenue could be raised through additional taxes, but this would burden Malaysians, Goh said. Another option could be the issuance of government bonds. “We are in an economic downturn now with lower revenue and higher spending, so we don’t have much choice other than to raise our budget deficit and finance Muhyiddin’s proposal through borrowing.“We do have slight fiscal flexibility to increase deficit financing by increasing borrowing, so we should be able to finance it for 2021,” he said, but the government would have to ensure it stays within its newly announced statutory debt limit.

 

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