KUALA LUMPUR – The government will continue implementing fiscal consolidation measures to ensure the country’s financial position is as strong as it was in 1992-1997, said the Finance Ministry (MoF).
The government takes the approach of refinancing debts that have reached maturity using new loans to supplement the government’s financial capability in order to remain competitive, the ministry said in a written reply on the Parliament website.
“However, to ensure the debt level is under control and manageable, several control measures must be observed to resolve the increasing debt issue,” MoF said.
The measures include continuing fiscal consolidation measures in a gradual manner to ensure new loans are lower than those taken during the pandemic without affecting the national economic recovery, it said.
The government will also broaden its revenue base and strive for sustainable revenue collection whereby the operating expenditure is financed fully by national revenue.
The government also has a current surplus that can be used as part of the development expenditure.
Moreover, MoF said, the government will ensure that debt service charges are manageable and do not exceed 15% of revenue.
In addition, it will ensure government borrowings are solely for financing development expenditure, focusing on high-impact projects and providing long-term returns to the nation and the people.
The government, it continued, will also review the method for implementing off-budget projects by focusing on mega-projects and projects that require high annual cash flow.
In the efforts to curb liabilities, the ministry said the government will limit the provision of government guarantees that would eventually raise the government’s financial commitments.
Meanwhile, MoF said, the government, through Bank Negara Malaysia, will ensure there is no drastic or excessive change in the ringgit’s value to prevent any economic disruption and ensure the foreign exchange market situation remains orderly.
“Hence, a flexible ringgit exchange rate has an important role in cushioning against external shocks without domestic economic activities being affected, especially amid current uncertainties in the financial markets and on global growth,” it added.
The ministry said the government has also taken more comprehensive measures to assist the people in handling inflationary pressures and high cost of living, such as through the control of goods’ prices and the Payung Rahmah initiative. – Bernama, June 17, 2023
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