DO WE HAVE THE FISCAL SPACE?

This is rather a common question posts whenever the government dished out their fiscal stimulus. The Covid-19 pandemic has yet to subside and the number of new cases has surpassed to a worrying level of late.

- DR MOHD AFZANIZAM ABDUL RASHID,

This necessitates the government to impose a full lockdown from 1 to 14 June 2021. Consequently, the government decided to announce its third fiscal stimulus, dubbed as Program Strategik Memperkasa Rakyat dan Ekonomi Tambahan or PEMERKASA+. The total allocation is earmarked at RM40 billion and it is much higher than the previous package of RM20 billion. Many would argue that the stimulus plan may not be enough.

But in all honesty, no one would really know how much enough is enough. In that respect, we have to give the credit to the government in coming up with such intervention, all in the name of mitigating the side effects of having the Movement Control Order (MCO).

In the Prime Minister speech, it clearly states that the government has limited fiscal space. What it means is that the government may not be able to splurge excessively and they need to be mindful of the repercussion such as the rating agencies whose opinion on credit will be taken seriously by the capital market investors.