Malaysian Institute of Economic Research (MIER) executive director, Dr Hezri Adnan
KUALA LUMPUR, Nov 11 – Budget 2022 is expansionary and is an exceptional budget which has a little something for everyone but there is the need to do more to address the operating expenditure (Opex) that had been increasing for some years.
Malaysian Institute of Economic Research (MIER) executive director, Dr Hezri Adnan said Opex had increased about 6.3 per cent with a big jump for development expenditure of about 21.9 per cent, a welcoming move, but the worrying part was the revenue side which was set to increase by six per cent.
“The financing of the budget is a challenge whereby as the end of June 2021, our debt level reached almost RM960 billion and it could reach RM1 trillion by the middle of next year. This is, of course, not sustainable.”
“If you were to combine the emolument and pension being paid to the civil service plus the debt that we have to shoulder that amount of more than 60 per cent of the budget and that leave a small space to do something,” he said in a virtual “Economic Chat: Post-Budget 2022: Towards Recovery?” organised by MIER today.
He said growing Opex is an issue, citing three ministries allocations, which include the higher learning education, education and health ministries which all combined totalling RM99.5 billion or about 60 per cent of the overall budget.
“But for higher learning education, about 79 per cent went to Opex and that is very high and this is similar with the Health Ministry with 39 per cent went to development expenditure and 54 per cent emolument.”
“And this is a kind of challenge that the government is facing and a hard question that they had to observe in the forthcoming years,” he said.
On the sustainability initiative, the continuation of ecological fiscal transfer for 2022, which the government has allocated RM70 million to state governments or about RM5 million each, is a good decision for the states to protect biodiversity and enhance conservation efforts.
But the devils in the detail, he said as there is yet a mechanism put forth on how the state authorities could access this fund as they would go straight to state coffers with no distinction. that it is only for conservation purposes.
“It is the same case with Cess money from timber logging that would also go straight to state coffers whereby it was supposed to be used for replanting and again there is no clear distinction.”
“This is a question of implementation. For this fund to reach the target and the outcome that we want, mechanism need to be spelt out moving forward,” he said.
On the outcome, Hezri said years back there was a unit in the Economic Planning Unit (EPU) called the Social Economic Research Unit (SERU) which was given a function to do evaluation but was discontinued in the 1990s.
“SERU had taken over 50 evaluative studies to know how money was being spent and whether we had spent it well, and on how projects were delivered. This function of the unit needs to be resurrected,” he suggested.
However, he said it is not only necessarily confine within the public service as it could be at function that could be shared among the think-tanks in Malaysia like MIER and a few others.
“They could help shoulder some of this burden so the public could have a more nuanced understanding of how difficult it is to implement projects and very much in the keeping of the spirit of the whole of nation approach.”
“The whole of nation approach is necessary and for that to happen it requires more transparency on the part of the government. I think we are moving in the right direction as we have pre-budget statements being released and if the government continues to push for it,” he added.