KUALA LUMPUR – The RM15 billion Malaysian Economic and Rakyat’s Protection Assistance Package (Permai) is expected to have a minimal fiscal impact on the country, and the government has no plans as of now to increase the statutory debt level to more than 60% of gross domestic product.
Treasury deputy secretary-general (policy) Zakiah Jaafar said Putrajaya is committed to maintaining the fiscal deficit target at 5.4% of GDP.
“We are still at the beginning of the year, so we can still realign government spending based on current priorities and through more prudent spending practices.
“The government’s priority is to ensure spending is in accordance with the set limit, strict monitoring, and the allocation reaches the target groups,” she told Bernama TV’s Ruang Bicara programme last night.
Even with Permai, she said, the government’s debt level is expected to remain manageable as it is spending prudently.
On the impact of the second movement control order (MCO) on economic growth, she said there is no doubt that it will affect the nation’s growth projection for this year.
“However, the impact is expected to be smaller compared with the previous MCO, as almost all economic sectors are able to continue operating, in addition to the Permai assistance, which complements previous stimulus packages.
“At the same time, there are positive factors that can support our economic growth this year, including higher oil prices of around US$50 to US$55 (RM202 to RM222) per barrel, compared with US$43 per barrel last year.”
She said oil prices are expected to remain stable in line with demand trends and the expectation of an economic recovery.
Malaysia’s exports have also returned to an uptrend following the recovery in trade with major trading partners.
Zakiah said the Covid-19 vaccination programme, which is expected to start in March, followed by Phases 2 and 3 in May and September, will also help towards economic recovery.
She said the government will do its best to avoid imposing a “full” MCO, which would see most economic activities halted.
The country cannot afford another prolonged, and more serious, economic crisis, she said.
“Basically, with the MCO 2.0, it is estimated that we may need between four and six weeks to flatten the Covid-19 curve, to reach a level that can be accommodated by the national healthcare system.
“Right now, we should not take it easy. Whether employers, employees or entrepreneurs, whether individuals or households, make sure we follow the prescribed standard operating procedures, including social distancing.”
She gave an assurance that the government will act swiftly should the situation require a change.
“Don’t worry, we always have a Plan B.” – Bernama, January 26, 2021
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