KUALA LUMPUR: Malaysian Prime Minister Anwar Ibrahim has appointed himself as finance minister, betting he’s the best person to sustain the country’s fragile post-pandemic recovery as the economy heads for a slowdown next year.
“I want to begin a new approach” and give local businesspeople and foreign investors confidence in the economy, Anwar, 75, told reporters after announcing his cabinet lineup on Friday evening.
But the veteran politician also named the head of a key bloc who faces graft charges as one of his deputies, seeking to strengthen his hold on a fragile multi-party coalition government.
Ahmad Zahid Hamidi, who heads the former ruling coalition Barisan Nasional, is a crucial pick for Anwar, who was appointed by the king last month after the country’s first-ever hung parliament.
Zahid was instrumental in ending that stalemate, and his selection as deputy prime minister could help stabilise support for Anwar ahead of a planned Dec 19 confidence vote.
The Barisan Nasional alliance dominated by the United Malays National Organisation (Umno) controls 30 seats in parliament, making it the second-largest bloc in Anwar’s unity government.
The decision to name Zahid as deputy premier may not go down well with the public who voted for Anwar’s Pakatan Harapan coalition partly due to its anti-corruption pledges. It may also face criticism even within the new premier’s own party.
During the election campaign, Pakatan Harapan leaders warned people against voting for Barisan Nasional as it might result in Zahid becoming prime minister.
Veteran politician Zahid is one of two deputy premiers in Anwar’s 28-member cabinet. The other is Fadillah Yusof, who is from a regional coalition of parties in Sarawak. He also was given the crucial plantations and commodities ministry portfolio.
This unity government has “about a two-thirds majority”, Anwar said before announcing his cabinet lineup. “With this mandate it has given us the confidence to form a cabinet that can work as a team and focus on the matter of accelerating economic growth and focus on the people’s problems.”
Zahid faces multiple graft charges in relation to his charity foundation, and is a close ally of jailed former premier Najib Razak, who was convicted of looting billions of dollars from the state development fund.
Zahid leads the Barisan Nasional bloc by virtue of his position as leader of Umno, and has come under criticism from within his party and coalition for pushing for an alliance with Anwar.
Umno must hold party elections by May 19 and there have been rumblings that Zahid should step down, but becoming deputy prime minister may help him fend off challenges to his leadership.
Anwar has sought to appease at least four disparate blocs in his government with the cabinet appointments. Pakatan Harapan won 82 seats in the election, the most of any coalition but not enough to form a majority.
He had secured pledges of support from multiple key political alliances, but their allegiance is fickle. In the days before Anwar was named premier, several lawmakers of these parties, including Umno, were prepared to support rival Muhyiddin Yassin for the top job.
In his role as finance minister, Anwar’s immediate challenge will be to present a budget to steer the economy through the pressures of lingering inflation, a weak currency and an unfavourable global economic environment. He has made protecting low and middle-income groups from rising prices the top priority of his administration.
His government will face “public pressure to use subsidies to contain the rising cost of living”, which will be an obstacle to fiscal consolidation, Fitch Ratings analysts wrote this week.
Malaysia’s economic growth is projected to slow to 4-5% in 2023 from an estimate of more than 7% this year, according to the central bank. That would come after a rapid, reopening-driven rebound in 2022, when GDP jumped 14.2% in the third quarter from a low base a year earlier, the fastest pace in more than a year.
The anticipated slowdown may prompt Anwar’s government to continue with subsidies that are projected to a reach a record US$18 billion in 2022, delaying its plan to reduce the budget deficit and rein in public debt.
Anwar said last weekend that his administration would review the blanket subsidies that are currently enjoyed by the rich as well as businesses in Malaysia, instead of being funneled to the most needy.
Still, any shift is likely to be gradual, given that the measures have helped to contain inflation and that Anwar has promised to boost spending on areas including health care and infrastructure, Fitch said.
