KUALA LUMPUR (Nov 7): The World Bank Group commends the overall stance of Budget 2021, saying that this is clearly the right time to sustain a counter-cyclical stance until a recovery is underway. 

It noted that the Budget attempts to strike a balance between providing support to lives and livelihoods today with investing in growth and an economic recovery tomorrow.

"We particularly welcome the emphasis on inclusivity with further measures to sustain social protection support to the vulnerable, including the expansion of the benefit levels and beneficiary coverage of the various existing and new cash transfer programs such as the Bantuan Prihatin Rakyat (BPR). 

"Measures to bridge the digital divide including via the broadband subsidy as well as allocation to the National Digital Infrastructure Plan (Jendela) are also steps in the right direction," World Bank lead economist Richard Record said in a statement today. 

Record also noted the introduction of several new measures for upskilling, reskilling, and the employment and re-employment of workers, with particular emphasis on specific groups of workers including the youth, the long-term unemployed, the disabled and those who have lost their jobs during the crisis.

These measures, he said, are useful steps in promoting job creation and re-employment which are important to facilitate a recovery from the crisis.

The World Bank, however, acknowledges that the fiscal responses to the ongoing Covid-19 crisis, coupled with a persistent decline in government revenue, will inevitably pose a challenge to the medium-term fiscal outlook. 

Like governments across the world, Record said Malaysia has depleted much of its available fiscal space and will exit the crisis with a larger burden of debt and contingent liabilities.

"As such, we welcome the announcements of several medium-term fiscal reform initiatives today, including the development of the Medium-term Revenue Strategy (MTFF), to address the fiscal legacies of the crisis, and to enhance the government’s revenue capacity to sustainably finance Malaysia’s long-term sustainable and inclusive growth agenda," he said. 

Nevertheless, Record warned that the path to an economic recovery is subject to continued downside risks. 

These downside risks include a slower-than-expected return to growth for the world economy leading to continued suppression of investors sentiment, the many uncertainties surrounding the development and deployment of Covid-19 vaccines and treatments, as well as the risk of enduring economic and social scars resulting from the recession. 

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