The failure of the previous government to keep tabs on inflation and the rapid slide in the value of the ringgit has resulted in Malaysians having to pay higher interests, Lim Guan Eng said.
The DAP chairman said the current unity government is handling the situation better, citing Bank Negara Malaysia’s (BNM) decision to maintain the overnight policy rate (OPR).
“The principal reasons for interest rate hikes stem from the need by BNM to contain inflation and restrain the rapid descent of the value of the ringgit, which dropped to a record low against both the Singapore dollar and US dollar under the previous government,” the Bagan MP said in a statement today.
“Clearly, fears of inflation and a spiralling slide in the value of the ringgit have receded under the new unity government, which is seen as a much safer bet for investors, horrified at the prospect of an alternative incompetent, extremist and racist government.”
BNM today made a decision to maintain the OPR at 2.75%.
The OPR sank to its lowest ever – 1.75% – in early 2020 after the global outbreak of Covid-19.
However, last year, the rate was raised four times to 2.75%.
Ismail Sabri Yaakob was the prime minister last year, having been appointed after Muhyiddin Yassin resigned in August 2021, barely after 15 months in charge.
Lim, however, pointed out that it was the failure of the Muhyiddin administration, claiming that despite spending nearly RM600 billion of public funds, the economy remained ineffectual.
“BNM had carried out a series of interest rate or OPR hikes last year by 1% due to the previous (government’s) failures to check inflation and the rapid slide in the value of the ringgit,” the former finance minister said.
“Despite nearly RM600 billion being pumped in by the Muhyiddin administration, economic growth remained anaemic, raising doubts as to the efficacy of the public funds spent.”
Lim welcomed BNM’s decision to retain the interest rate, saying it will offer a much-needed respite for businesses and borrowers.
He praised the government led by Prime Minister Anwar Ibrahim for returning the trust of investors and the ringgit’s positive performance against the greenback.
“The formation of the unity government under Anwar since November 24, 2022, has also bolstered investor and market confidence, as evidenced by the marked appreciation of the value of the ringgit against the US dollar from RM4.75 under the previous government to RM 4.32 today,” he said.
“By halting interest rate hikes, the government will have an opportunity to address slower growth brought about by the US recession.
“Restraining borrowing costs will help ease the cost pressure on individual and bank borrowers and boost higher consumption spending.
“The halt in interest rate hikes is also a small Chinese New Year ang pow given to borrowers and hopefully, will allow the government to give its full attention to reducing business costs while generating more business opportunities.” – TMI