Budget 2024 ‘a fine balancing act’, but not reformist enough, says veteran economist

“It looks like it’s business as usual”, was how veteran economist Tan Sri Ramon Navaratnam summed up Budget 2024, which was tabled by Prime Minister Datuk Seri Anwar Ibrahim last Friday.

Navaratnam, a former deputy secretary-general of the Treasury, said he felt Anwar could have done more to reduce the national debt, which had climbed to RM1,079.59 billion in 2022, an increase of RM99.78 billion (or 10.2 per cent), from RM979.81 billion, the previous year.

“There were not many new policies aimed at reducing the national debt. It looks like it’s business as usual,” said Navaratnam.

“There is a lot more that the government could do, but I suppose it is not in a position to do so due to the political scenario in the country.”

He said that while Anwar had formed a so-called ‘Unity Government’, a large opposition bloc under Perikataan Nasional threatens to destabilise the country.

As such, he feels that although Anwar knows he could do more, the prime minister had to make sure that he did not lose the support of the people by slashing critical subsidies such as petrol and electricity.

Fuel subsidies remain, and the government has set aside RM55 million to give an RM40 rebate per month to the hardcore poor.

“Having been in the Treasury previously, I know that no budget will please 100 per cent of the people. There will always be people complaining,” said Navaratnam.

“As such, I appreciate what a fine balancing act Anwar has done with Budget 2024. He needed something to bring positivity to the nation, but at the same time, retain the confidence of the people.”

Navaratnam said the government’s move to reduce diesel subsidies could be an indication of what to expect in the coming year.

“It looks like the government will eventually reduce subsidies for petrol, but they have begun with a targeted withdrawal of diesel subsidies, in phases, from next year.”

Anwar said that the government spent RM1.5 billion on diesel subsidies last year.

“It is a question of timing. The easing or reduction of subsidies will hit the lower-income groups, if not done right,” said Navaratnam.

“The government must get the mechanics right and ensure that if and when they decide to reduce fuel subsidies, it affects the T20 instead of the B40.”

For the record, the government spent RM50.8 billion on petrol, diesel, and liquefied petroleum gas subsidies in 2022. Of that amount, 35 per cent – or RM17 billion – benefited the T20 segment.

“Can you imagine how much good the government could do with that RM17 billion,” asked Navaratnam.