Malaysia unveils record budget to spur post-pandemic recovery

Malaysia announced its largest ever budget on Friday to jump-start a pandemic-battered economy, promising more developmental spending, subsidies and cash aid to drive growth in 2022.

The Southeast Asian country has seen fresh Covid-19 lockdowns this year dampen recovery, but a ramped-up vaccination drive and gradual reopening have boosted hopes of a turnaround.

“The 2022 budget... is a continuation of aid packages and economic stimulus announced before this,” Finance Minister Tengku Zafrul Abdul Aziz said in his budget speech to parliament.

The government’s fiscal deficit is expected to moderate to 6 per cent in 2022, after climbing to 6.5 per cent this year, but it warned in reports accompanying the budget that fiscal consolidation is expected to be more gradual than expected amid higher Covid-19 spending.

The expansionary budget also sets the stage for a general election that could be called by in the middle of next year. Malaysia’s next polls are due by 2023.

The government plans to spend 332.1 billion ringgit ($80.06 billion) in 2022, up from 320.6 billion ringgit this year, despite the expected hit to fiscal deficit consolidation.