Malaysian Finance Minister Lim Guan Eng on Tuesday said that the government plans new tax measures to help raise funds to pay off national debts that have snowballed due to corruption under the previous government.
Lim said that it will take the government three years to resolve its fiscal woes due to more than 1 trillion ringgit ($240.5 billion) in debt and another 35 billion ringgit ($8.4 billion) in newly discovered unpaid tax refunds that were not disclosed by the previous government.
“Fiscal consolidation will not be achieved easily, and we must be willing to expect some pain and even offer some sacrifice. We would need 3 years to resolve the fiscal issues,” Lim told an economic forum.
He didn’t give details of the tax measures but said that these will be announced in the 2019 federal budget that will be unveiled on November 2.
Prime Minister Mahathir Mohamad told the forum the fiscal problems have turned Malaysia from an Asian tiger into a “small kitten.”
“It is going to be tough for the government because it inherited a country that is completely disoriented,” said Mahathir, who was elected a second time to become the world’s oldest leader at 93.
“We may have to devise new taxes in order to have the money to pay our debts. Of course, the other thing we can do is to sell our assets.”
Anger over massive corruption at the 1MDB state investment fund prompted Mahathir who led Malaysia for 22 years until 2003 to make a political comeback and turn on his former party.
Mahathir’s alliance won a stunning victory in May 9 elections to oust scandal-tainted former Prime Minister Najib Razak, ushering in the country’s first change of power since independence from Britain in 1957.
Lim said that the government may sell its equity in state-owned companies to raise funds but will aim to strike a balance between fiscal consolidation and ensuring productive spending and investment.
“While it is imperative for the government to be prudent with our expenditure, we are equally cognisant that we must not fall into the austerity trap. What we want is merely to get a bigger bang for the buck,” Lim said at the forum.