REGARDLESS of the reason for Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz to delay presenting Budget 2021 in the Dewan Rakyat by one month from Oct 2 to Nov 6 this year, the new timeline is excruciatingly tight.
Malaysia’s new fiscal year begins on Jan 1, 2021. With 25 days allocated for debate and the Dewan Rakyat session scheduled to end on Dec 15 this year, this suggests the current ruling coalition, Perikatan Nasional (PN), is extremely confident of passing Budget 2021 without any legislative hiccups.
Like any legislation, Budget 2021 must be approved by a majority in the 222-member Dewan Rakyat and the Dewan Negara’s 70 Senators before receiving the royal assent.
Since 1957, Malaysia has been governed by three coalitions, Barisan Nasional (BN) for 60 years until it was trounced by Pakatan Harapan (PH) on May 9, 2018 and then by PN when it displaced PH on March 1 this year.
How many Senators, appointed for a three-year term and allowed just one extension, owe their appointments to PH and will they need to be assiduously courted?
Is 11 working days – from Dec 15 until Jan 1, 2021 – sufficient time to ensure budget allocations can be disbursed on or soon after Jan 2, 2021?
Re-scheduling Budget 2021 to a November date offers some advantages. A later date will give Finance Ministry boffins a better indication about price prospects about a significant contributor of federal government revenue, oil.
Recently, international rating agency Moody’s Investors Service cut by US$8/barrel (RM34.16/ barrel) its average price forecast for global benchmark Brent oil to US$35/barrel for 2020 and US$45/barrel for 2021.
Moody’s lowered price expectations assumed “lower oil demand for several years” due to long-lasting changes in oil-intensive travel and transport.
By November, Malaysian Treasury officials will be better informed about the devastation wrought by the Covid-19 lockdown on the US economy.
According to BBC, California was the first state to go into lockdown on March 19 this year while Georgia, on April 3, was one of the last American states to do so. This suggests the lockdown’s full impact could be statistically apparent in May 2020 data.
Earlier this month, the Atlanta Federal Reserve predicted a 52.8% plunge in US second quarter Gross Domestic Product (GDP) following data from the Institute for Supply Manufacturing (ISM) showing 43.1% of firms see an expansion in May.
Extrapolating from ISM data, the Atlanta Fed expects personal consumption expenditure, comprising 68% of US GDP, to tumble by 58.1% in the April-June quarter.
GDP is the total value of goods and services produced within a country during a year.
Last week, the US Labor Department announced the number of unemployed Americans swelled from 6.2 million in February to 20.5 million in May this year.
This three-month surge caused the unemployment rate to soar from 3.8% in February, among the lowest since World War II, to 13% in May, slightly lower than April’s 14.4%. During the post-World War era, April’s unemployment rate was the highest while May was the second-highest.
As countries ease lockdown restrictions, this has prompted fears of a second wave of Covid-19 infections.
Last Saturday, over 25,000 new cases were reported throughout the US, the highest tally since May 2, a Reuters article says. Many of these states are also seeing record hospitalisations, a metric not affected by increased testing, Reuters adds.
On Monday, shares on Wall Street initially dived due to growing concern over a resurgence of the Covid-19 virus stateside but recovered sharply on news the US Federal Reserve will buy individual corporate bonds.
On Tuesday, the Dow Jones Industrial Average futures jumped, fuelled by a Bloomberg report that US President Donald Trump is preparing a US$1 trillion infrastructure proposal.
If true, this highlights the magnitude of financial assistance needed to reinvigorate the US economy. Would a similar scale of support be necessary in Malaysia?
On Tuesday, news reports say a fresh outbreak in Beijing totals 100 coronavirus cases, all linked to the Xinfadi wholesale market that supplies 90% of the capital’s fruits and vegetables. The first infection was confirmed on June 11, 56 days after zero cases. This news is worrying because China was presumed to have decisively overcome this virus.
A cell biologist at University College in London, Jennifer Rohn suggests a second wave of Covid-19 “is no longer a matter of ‘if’ but ‘when’ and ‘how devastating’”.
Coincidentally, Budget 2021 will be tabled in the Dewan Rakyat three days after American voters decide whether to re-elect President Trump or vote for former vice-president Joe Biden to become the new White House occupant.
On Budget Day, Malaysians will know whether Americans have elected to continue the country’s isolationist policies, including relegating globalised trade to the backburner and withdrawing from the World Health Organisation, or whether the US will resume its global leadership role.
Opinions expressed in this article are the personal views of the writer and should not be attributed to any organisation she is connected with. She can be contacted at siokchoo@thesundaily.com
