KUALA LUMPUR -- Malaysian Prime Minister Ismail Sabri Yaakob's government on Friday proposed the largest budget in the country's history for 2022, worth 332.1 billion ringgit ($80.2 billion), as it aims to propel the economy out of the coronavirus crisis and ease unemployment.
The spending package, Ismail Sabri's first after taking power in August, includes ambitious development outlays totaling 75.6 billion ringgit, up nearly 22% from this year's budget. Operating expenditure comes in at 233.5 billion ringgit, up a little more than 6%, along with a 23 billion ringgit fund dedicated to dealing with COVID-19 as the country begins to treat it as an endemic disease that can be managed -- not eradicated.
Finance Minister Tengku Zafrul Abdul Aziz, who unveiled the budget in parliament, said that "with the government's revenue expected to increase to 234 billion ringgit, I would like to announce an expansionary budget for 2022." The plan tops the 320.6 billion ringgit budget for 2021, and thanks to a cease-fire pact between the government and opposition, it is expected to pass .
After two long years of a pandemic-induced economic crisis that forced thousands of businesses to close and joblessness to rise, the finance minister stressed the need to help get people back to work.
Tengku Zafrul said the unemployment rate of 4.6% remains a concern for the government, and that it would allocate 4.8 billion ringgit to provide 600,000 employment opportunities. "With the initiatives, we hope the unemployment rate can be brought down to 4% and the country can achieve fully employed nation status," he said.
The government has also allocated 8.2 billion ringgit for direct cash aid to low-income households, in the form of handouts up to 2,000 ringgit each.
On economic growth, Tengku Zafrul said the government foresees gross domestic product expanding between 5.5% and 6.5% next year, up from an expected 3% to 4% rate for this year. "The first half of 2021 saw excellent growth of 7.1% but we are expecting a slow third quarter due to the movement control order imposed," he said. "The fourth quarter is expected to recover with the reopening of economic sectors."
Full-capacity reopenings of various sectors only started last month. The government has also allowed interstate travel to resume, attempting to breathe life back into the economy at the risk of new cases rising again.
Due to additional expenses incurred in combating COVID-19, the government estimates the budget deficit will reach 6.5% this year, but that it will narrow to 6% in 2022.
Malaysia's coronavirus outbreak has abated, from a daily infection peak of over 24,000 in August to the 5,000 to 6,000 range of late. About 74% of the total population is fully vaccinated. Still, since the country "is not fully recovered from COVID-19," the budget allocates 32.4 billion ringgit for the Health Ministry. About 4 billion ringgit of that will be dedicated to managing the virus and increasing public health care capacity.
The budget will be put to a vote on Nov. 18. But unlike last time around, when predecessor Prime Minister Muhyiddin Yassin faced an uphill battle until the eleventh hour to pass the 2021 budget with a narrow majority, Ismail Sabri's government is expected to encounter relatively little drama.
Soon after taking over following Muhyiddin's resignation, Ismail Sabri secured a historic agreement with major opposition parties led by Anwar Ibrahim. The deal stipulates the government will hold consultations with the opposition on new laws and amendments, in return for their support in parliament. The anticipated passage of the budget would also mean a vote for Ismail Sabri's government, strengthening his grip on the premiership for the time being.