Malaysia unveils blockbuster 2021 budget aimed at cushioning the coronavirus impact

[KUALA LUMPUR] Malaysia's government Friday unveiled a blockbuster 2021 budget aimed at cushioning the coronavirus impact, with the embattled prime minister hoping for strong support to strengthen his tenuous hold on power.

The government increased spending by 2.5 per cent to US$78 billion from 2020, with a substantial chunk aimed at combatting Covid-19.

Authorities estimated that the economy, which contracted sharply this year, will rebound strongly in 2021, growing 6.5-7.5 per cent.

Muhyiddin Yassin's eight-month-old administration is highly unstable, with only a wafer-thin majority in parliament and under intense pressure from the opposition.

Political turmoil intensified last month after the king rejected Mr Muhyiddin's request to declare a state of emergency - a move he claimed was aimed at fighting the virus, but which critics said was a bid to cling to power.

The budget, which will be debated and voted on in the coming weeks, is seen as a test of confidence in Mr Muhyiddin's shaky administration and defeat could lead to its collapse.

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However, most now expect it to pass as MPs wants to avoid a general election as the country faces a resurgence in virus cases, and Mr Muhyiddin has called for cross-party support.

The premier said the 2021 budget would "continue to focus on protecting the livelihood and welfare of the people, revitalising and supporting the economy".

Malaysia has had a relatively mild virus outbreak but cases climbed sharply in recent weeks, leading authorities to re-impose some curbs.

Mr Muhyiddin, who took power in March without a vote after a reformist government collapsed, faces a challenge from opposition leader Anwar Ibrahim and there have been rumblings of discontent from his coalition partners.

AFP