PRIHATIN 1 & 2: Prihatin Rakyat Economic Stimulus Package

The RM250 billion economic stimulus package (PRIHATIN) announced by Prime Minister Tan Sri Muhyiddin Yassin on Friday, 27 March 2020 concentrates on reviving the economy. The first part of the budget, Pakej Rangsangan Ekonomi PRE2020 was announced by Tun Dr. Mahathir Mohamad on February 27, 2020.

The breakdown of PRIHATIN:

RM128b  - on welfare and well being, comprises 51%
RM100b - strengthen the nation's economy, comprises 41%
RM22b - direct fiscal stimulus package, PRE1 20b, PRE2 2b, comprises 8%

Fiscal Deficit

According to Tan Sri Wahid Omar, PRE1 increases fiscal deficit to 3.4% of GDP
PRE2 will widen the deficit to 6.2% of GDP
However, there are measures that government can take to reduce the deficit 4.6% of GDP. This is to maintain Malaysia's present rating of A3/A-
A fiscal deficit of more than 5% of GDP will put pressure on international rating.

It is unfortunate that we cannot reduce the deficit to below 3% after trying for so many years. However, at this moment, this is the best that we can do. Hopefully, the second global negative impact of globalisation (the first one was Global Financial Crisis 2007/2008 - GFC) will strengthen domestic demand.

A few days ago, IMF confirmed that the world is indeed in recession. This time, it probably would be worse than the GFC.
Prudent spending, Mak Cik Kiah. Be financial literate.

The article by Tan Sri Wahid Omar is available at the following links.
English version.
Malay version.

Pic. Current Account Position

Pic. Budget Deficit since 1998