KUALA LUMPUR — Putrajaya will be heavily in debt if Perikatan Nasional (PN) goes ahead and implements the RM322.5 billion (S$105 billion) budget allocated for next year, said Dr Mahathir Mohamad. 

The former prime minister was worried the country would not be able to service the RM1.3 trillion debt it will have to undertake to implement the huge budget.

“I must admit to being frightened. It is a behemoth of a budget but can we raise the money to finance it. Government debt will be RM1.3 trillion. How do we pay?” he questioned in a statement on Monday (Nov 9).

The 95-year old also asked how the government intends to generate enough money to pay up the debts when the economy is badly hit by pandemic and is not expected to recover anytime soon. 

“I am not a financier. These big figures are mind-boggling. It seems the government will be putting money in the pockets of everyone — rich and poor, employed and unemployed.

“The question I would like to ask is where the money will come from. The deficit is said to be about RM85 billion. It is bigger than the development budget of RM69 billion,” Dr Mahathir said. 

The Pejuang chairman warned the government would be bankrupt if the loans taken could not be serviced within the next year. 

“I suppose the government will have to borrow to implement the budget. This is expected to increase government debt to RM1.3 trillion. That is a lot of money. If you fail to service loans, you may be bankrupted,” he said. 

The Langkawi MP said even if a vaccine is found by Jan 1 next year, the economy will still take time to recover and the government’s revenue would also shrink as businesses will not be making profits to pay tax.

“While the economic situation requires more money to be spent by the government, the pandemic also affects government revenue.

“When businesses do not do well, they would pay less tax to the government. Indeed, when they fail to make profits, they would pay no taxes to the government. Government revenue will shrink during this pandemic,” Dr Mahathir said. 

Among the suggestions the former prime minister put forward was slashing the salaries of high earners from the public and private sector including the ministers. 

“I think people earning high salaries in the government or private sector should forgo 10 per cent of their salaries. It is a sacrifice but I don’t think it would hurt them if there is a reasonable cut-off point, say RM20,000 per month.”

He added even operational and developmental costs could be cut down in order to save money during the pandemic. 

“I can understand the need but we can still prune the operation and development costs. In the last 15 years salaries had increased at very high rates — as much as 25 per cent each time. Ministers and MPs had been given numerous allowances. 

“Giving up their posts would deprive them of so much money. Principles don’t count anymore. It is perhaps better to make these posts less lucrative,” Dr Mahathir said. 

He also said the government needs to modify the budget soon in order to prevent untoward debts or instability of the administration due to failure to service the loans. 

“I hope this budget would be modified to be more realistic. Then we can support it. We need not be bribed for our support. We do not want to precipitate a crisis,” he said.

Opposition leader Anwar Ibrahim earlier on Monday said he would not back Budget 2021 as questions remain over income projections, Covid-19 allocations and dodgy accounting practices.

The Muhyiddin Yassin government, which only has 113 MPs backing it, is hoping the opposition supports its first federal budget as it still has unresolved issues with its ally Barisan Nasional. THE MALAYSIAN INSIGHT