BIALAYSIA: GOVERNMENT ANNOUNCES LARGEST BUDGET IN HISTORY TO ADDRESS COVID-19 IMPACT AND SPUR ECONOMIC GROWTH On 6 November, Finance Minister Tengku Zafrul Aziz presented the government's 2021 draft budget. The expansionary plan envisions signicantly higher public spendingthe largest in historyand aims to address the harsh economic impact of the health crisis and lay the foundations for a strong recovery in 2021. Notably, the package foresees increased revenues on the back of higher tax collections due to the economy gradually recovering, and forecasts a lower scal decit than in 2020, laying down plans for gradual scal consolidation until 2023. That said, much depends on the evolution of the pandemic and the government's ability to execute its spending plans. Spending for 2021 is forecast at MYR 322.5 billion (around USD 78.0 billion; 2020 revised gure: MYR 314.7 billion), an increase of around 8.5% relative to 2020's original budget. Looking at individual spending areas, in'astructure spending is expected to receive a substantial boost as the government restarts key projects in a bid to revive construction activity. Moreover, health and social spending is also seen increasing, While the dedicated Covid-19 fund, established in mid-October and largely composed of wage subsidies, will receive lower nancing as the pandemic's impact. Discussion Questions 1. Justify how strong economy affect the size of the budget decit. 2. Assume that the economy is operating at full employment and furthermore there is a government budget surplus. What might be the macroeconomic impact if Congress decides to take the budget surplus and return it to taxpayers as a rebate