Dr M’s call for budget cuts is economic suicide, says Najib

(FMT) – Former prime minister Najib Razak has described as “economic suicide” suggestions by Dr Mahathir Mohamad that Putrajaya cut budget costs by postponing or cancelling development projects.

Najib said the suggestion “did not make sense.”

Using the term PM4/PM7 to describe Mahathir (as the fourth and seventh Malaysian prime minister), Najib said: “At a time when domestic and foreign investors are not investing, PM4/PM7 wants the government to stop public investment.”

He added: “If that’s the case, where will the source of economic growth and new employment come from, for this year and the years to come? It is better for him to tell the Malaysian economy to just commit suicide.”

Najib, who was Malaysia’s sixth prime minister, also cautioned Putrajaya about the negative effects of the “tax holiday” on sales tax for car sales from June 15 to Dec 31.

He said those who bought cars during this period would be burdened with debt to a point where they would spend less in future years. This was evident when the former Pakatan Harapan government had used similar tactics with a three-month tax holiday in 2018, which he said “ruined” the economy in 2019.

Mahathir’s suggestion of budget cuts was made yesterday during the debate on the 2021 budget estimates. Mahathir had said there was no need for the 2021 budget amounting to RM322.5 billion to be so big, and he questioned the RM160 million allocation for offices of the international trade ministry, RM231 million for the domestic trade ministry, and the increase for the Prime Minister’s Department from RM7.9 billion to RM11.7 billion.

He said development expenditure could be temporarily delayed or reduced in favour of spending to fight the pandemic and reviving the economy.

He also reminded the government that they still had to pay RM39 billion in debt sustained by the Barisan Nasional government, while Putrajaya’s debts could rise to RM1.3 trillion with the 2021 budget.