High budget allocation for 2022 will incur debt; culture of corruption has returned to Malaysia: Mahathir
KUALA LUMPUR: The high allocation for Malaysia’s 2022 national budget will cause the country to incur more debt, potentially burdening future governments, said former prime minister Mahathir Mohamad on Tuesday (Nov 2).
The Member of Parliament for Langkawi also claimed that the culture of corruption has returned to Malaysian politics. He said that unimportant government positions have been created to grant individuals status and income, further increasing the pressure on government spending and national debt.
Dr Mahathir was speaking during the second day of the parliamentary debate for Malaysia’s 2022 budget.
Last Friday, Finance Minister Tengku Zafrul Tengku Abdul Aziz unveiled a RM332.1 billion (US$80.06 billion) budget for 2022, the country’s largest ever allocation.
The budget for next year is up from RM320.6 billion in 2021. The projected revenue for 2022 was set at RM234 billion.
In his speech, Dr Mahathir posited that the government’s decision to increase spending is a populist move.
However, he warned that spending more than the projected revenue was a signal that the government was willing to add on to national debt, which he said currently stood at more than RM1 trillion.
“I believe if a general election is held the day after tomorrow, the political parties in government will win big,” said Dr Mahathir.
“RM332 billion will be spent, a record. But the projected revenue for 2022 is RM234 billion. Where will the remaining RM98 billion come from? It is highly probable that the government will incur debt … Our total debt will increase again,” he stated.
Last month, the Lower House passed a Bill to raise the statutory debt ceiling to 65 per cent of gross domestic product, as part of measures to deal with the economic fallout of the COVID-19 pandemic.
This was the second time in as many years that the government has sought to raise its debt ceiling. In 2020, it was raised to 60 per cent of GDP, the first increase since July 2009.
Dr Mahathir said he understood that the government needed to allocate funds to fight the COVID-19 pandemic and to boost the economy.
However, he called for the government to focus its efforts to retrieve funds which he said were misappropriated under the administration of Najib Razak.
Last year, Najib was found guilty of corruption and money laundering in a 1Malaysia Development Berhad-linked case. He denies wrongdoing and is appealing the verdict.
“Is the government serious about getting back the funds which have been misappropriated?” said Dr Mahathir.
“The government is free to plunge the country into more debt but it’s the upcoming generations who will pay for this. The debt cannot be settled if we are in debt to pay off debts,” he added.
Dr Mahathir added that the burden of repaying the debt will fall on subsequent governments. He also urged the current administration to reduce expenditure in the fields of education, agriculture and telecommunications by relying on new technology and working with the private sector.
“Debts must be settled. Failure to settle national debt could lead to bankruptcy,” he added.
Dr Mahathir alleged that another reason why the total allocation had increased was that funds were being set aside for political corruption.
“Indeed the culture of corruption is back and its costs are borne by the government. The kind of corruption where unimportant government positions are created,” said Dr Mahathir.
“The priority is that the recipients of these positions support the government. They were given ministerial status so that their status and incomes were higher. Hence, budget spending and debt will increase further.”
Dr Mahathir also called for the government to review the 2022 national budget and reconsider the spending.
“We don’t need to be proud of the fact we are presenting the biggest budget in the history of the country. The reason why it is big is because (we are prepared to incur) huge debt,” he added.