KUALA LUMPUR – Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz will propose to the cabinet that the statutory debt limit be raised to 65% from the current 60% of gross domestic product.
Although the statutory debt-to-GDP ratio is currently at 58%, he said, given the commitment made by the government to support the people and businesses, the ratio will probably increase to above 60% by year-end.
“Today, we are still below 60%, (which is) about 58% of our statutory debt limit, and even if we breach it, it will be marginal, but then again, we still have to go to Parliament to increase the limit.
“The plan is to present (the proposal) to the cabinet next week. Then, we will bring it to Parliament at the right time,” he told a press conference here today.
Asked if the government will consider foreign borrowings due to the limited fiscal space, he said Putrajaya will not do so for now.
“We have ample liquidity in the market that we can tap into. We expect to fund all stimulus packages by tapping into the local ringgit market, and we have enough liquidity without having to be concerned about impacting the local market.”
He admitted, however, that the government has limited fiscal space, but that has not stopped it from continuing to expand its fiscal policy to support the economy.
“We have revised our spending to increase borrowings, and our deficit has gone up, which is forecast to be up to 6.5% to 7.0%.”
To date, about 97% of the government’s total borrowings are ringgit-denominated, with just 3% in foreign currencies, he said.
On the reintroduction of the goods and services tax in Budget 2022, he said the government is focusing on reviving the economy, and now is not the right time to bring back old consumption taxes like GST.
Putrajaya is looking at ways to enhance revenue and address the issue of revenue leakages, he said.
On the expectation that Malaysia will be able to enter the Covid-19 endemic phase by end-October, Tengku Zafrul said he hopes all sectors will be allowed to resume operations by then.
“Once we enter the endemic phase, there will be changes to the standard operating procedures. This will be discussed by the National Security Council.” – Bernama, September 3, 2021
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