The Federal Government should stop its obsession with macroeconomic numbers and focus instead on implementing structural economic reforms in preparing Budget 2017, says Amanah’s Dr Dzulkefly Ahmad.
Speaking to FMT, Dzulkefly, who is Amanah’s strategy director, said when Budget 2016 was recalibrated in January this year, one of the important targets was to maintain a budget deficit of 3.1 per cent, rather than a worrying 4.0 per cent deficit.
“It was also to avoid a sharp worsening of business and consumer sentiment. Not the least of which was to avoid a sovereign rating downgrading.”
Dzulkefly said while the government then slashed its expenditure budget by RM9 billion to meet the deficit target, in the first half of 2016 its operating expenditure had expanded by 2.1 per cent, while development expenditure increased by 30 per cent.
“As reported, total revenue that was projected to drop by approximately 1 per cent for the whole of 2016, actually fell by almost 10 per cent in the first half of 2016,” he said, adding this meant for the first half of the year, there was an estimated RM17 billion shortfall in revenue.
Hence, Dzulkefly said, the million dollar question now was whether Putrajaya was still capable of meeting the targeted 3.1 per cent budget deficit.
He, however, said it was more important for Putrajaya not to repeat the mistakes made regarding the economy, and not to be overly obsessed with macroeconomic numbers.
“Doing more of the same while simply paying lip-service to the need for a higher performing economy, without structural reforms does not help the anaemic economy and its productivity,” he said, adding this only served the rentier-class and the privileged few.
He said more concrete measures, other than cash-handouts, must be put in place to get a higher income for the Bottom-40 (B-40).
According to him, the solution to the problems faced by the Middle-40 (M-40) does not lie in BRIM cash-handouts as this will only doom the M-40 to remain in the middle-income trap.
“Misallocation of resources must also stop and the importance of education and upgrading of skill-sets in capacity building of the human capital must not be compromised”.
Dzulkefly said it was high time to dismantle monopolies which were distorting the market and disallowing for better competition among genuine business enterprises, as this would help keep prices down.
“Finally, our obsession and penchant for show-casing ‘numbers’ have actually deluded the people into believing that all is well with our economy.
“Regrettably too, it doesn’t at all represent the real matrix of happiness and prosperity for the citizenry.”