KUALA LUMPUR (Jan 27): The new direction introduced recently by Prime Minister Datuk Seri Anwar Ibrahim with the “Developing Malaysia Madani” theme is vital for growth and narrowing the inequality gap, said the Institute for Democracy and Economic Affairs (Ideas).

Ideas said it provides an emphasis on poverty alleviation, sustainable growth and further support for small and medium enterprises. 

“Additionally, it was emphasised that the subsidy rationalisation plans should be guided by evidence and the latest data available.

“Such efforts are very much needed for fiscal consolidation in the medium term,” it said in a statement on Friday (Dec 27). 

Nevertheless, the institute warned that if fiscal consolidation cannot be implemented as part of a medium-term plan, national debt may continue to rise and limit fiscal policy space in the event of an economic downturn, thus impacting vulnerable groups disproportionately, especially in times of crises.

Ideas said efforts towards fiscal consolidation are imperative, considering the extent to which the pandemic has excessively inflicted a heavy burden on pre-existing vulnerable populations. 

Its chief executive officer Tricia Yeoh said with the increase of the national debt to RM1.5 trillion, the government needs to implement a form of fiscal consolidation in order to avoid excessive deficits in the long term and obtain a sustainable budgetary position. 

“To support this process, a form of subsidy rationalisation should be carried out, ensuring that subsidies are targeted to the underserved and vulnerable population,” she said.

In the long term, she said the government must commit to the Fiscal Responsibility Act in order to strengthen its financial discipline and foster fiscal sustainability.

Yeoh said that Ideas is looking forward to the tabling of the new Budget 2023 on Feb 24, and seeing how the theme would be reflected in the new government’s first major policy document, which sets out its priorities for the year.

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