We’re starting today’s BTL with something we just mentioned in brief in yesterday’s newsletter. In truth, most of the news media kinda missed playing this piece up.

Perhaps, like us, they were distracted by the drama of the ongoing battle between the Dr Mahathir Mohamad and Anwar Ibrahim. But the issue that follows is actually the more important one simply because it affects each and every one of us, which is why we’re looking at it in depth today.
 
Finance Minister Tengku Zafrul Abdul Aziz says the country’s debt could rise to the statutory limit of 55% of the gross domestic product (GDP) by the end of the year. At present, we are operating at 52% of GDP, following the implementation of measures meant to protect livelihoods and stimulate the economy after the country had to be partially shut down thanks to the Covid-19 pandemic.
 
These, of course, are the RM260 billion Prihatin and RM35 billion Penjana programmes, which bring the government’s direct fiscal injection to RM45 billion.
 
Tengku Zafrul, however, says the 97-98% of the debt is domestic, meaning there is very little exposure to foreign currency fluctuations. And the government, he says, is committed to maintaining strict fiscal discipline. 
 
Earlier this month, the moneybags minister had said Malaysia aimed to borrow its way out of the economic slump brought on by the pandemic, and was open to increasing the debt ceiling beyond 55%, though he declined to say how much higher the government was willing to go. 
 
But what does all this mean, especially for us plebs? Can the government afford all this? Will higher public debts lead to higher taxes?
 
Well, according to this article, a debt-to-GDP ratio of 60% is often noted as a prudential limit. The 55% ceiling we have, basically, is set by the government, so there is still room for it to be raised, though the Muhyiddin Yassin administration will have to seek Parliament’s approval to do this. 
 
What the article also points out is that the growing debt means the amount the government will pay for repayment will rise as well, and it is already its third-largest budget line for operating expenditure. To cut a long story short, once the economy has recovered, the only way to avoid adding to the debt is to reduce budget deficits, and two ways to do this is to cut public spending and, more importantly to us little people, boost taxes.
 
So yes, peeps. While the gomen has no choice but to boost the economy that has suffered due to the pandemic, we have to realise that keeping such debts for too long will only increase national debt. What this could eventually translate to is an increase in taxes, though how much taxes grow is something only time can tell.
 
Increasing taxes, as we all know, has positive and negative effects. On the one hand, the public debt is managed better and the economy improved. On the other hand, it can lead to reduced wages, lower discretionary or disposable income, and even a decrease in productivity. This article explains it further, even if it is based on examples in the UK. 
 
So, while we are certainly feeling the effects of the Covid-19 pandemic now, and the government is trying to do whatever it can to minimise that impact, it seems we may face a little more hardship in the future and will likely have to tighten our belts even more. This is especially so considering the International Monetary Fund has forecast an even deeper global recession than estimated earlier. 
 
Regular slobs like us may suffer, but it looks like such things are no matter to some people – like Perak MB Faizal Azumu, for instance, who was recently spotted in a brand spanking new Lexus ES sedan. He said the state government bought the new car for him at a discounted price because one of the 16 Toyota Camry vehicles it has was sold to a state legal adviser when she retired, sort of as a parting gift. 
 
Here’s the thing though. Those Camrys were only just purchased last year, and Faizal and the state government had come in for a lot of criticism for those purchases as well. Why the need to sell off one of the cars which are still relatively new and get a new one, even if it’s at a heavily discounted price? And, at a time like this when everyone is suffering? 
 
Well, just like last year, the purchase of the Lexus also drew flak. Pakatan Youth took the opportunity to slam Faizal and gang for buying the car, calling it a selfish turn of events when thousands were jobless.