KUALA LUMPUR – Malaysia’s fiscal deficit is expected to go up to between 6.5% and 7% of its gross domestic product (GDP) this year from the 6% targeted earlier, after factoring in the recent stimulus packages announced by the government.
Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz said the government is ready to expand fiscal space whenever necessary to support the economy and the people.
“We have a deficit that is going to reach 7%. It is not about the size of the deficit, it is the ability to borrow and the size of the reserves.
“Although Malaysia is A-rated, in terms of our fiscal reserves, we are smaller than many other A-rated countries. The only difference is that we have strong growth prospects,” he said during an exclusive interview with South China Morning Post.
The minister, who is a former banker, said the country recorded its highest ever deficit in 2008-2009 (6.7%-6.9%).
He opined that at the end of the day, the most important thing is whether the country is giving adequate support to the people.
“I feel that the support the government has given – given the fiscal constraints that we have – is adequate.
“You must also look at our debt service coverage ratio and the liquidity of the domestic institutions today.”
On whether the white flag campaign initiated by the people suggests that the stimulus packages are not working, Tengku Zafrul answered in the negative.
“We have addressed some of those issues by ensuring all elected representatives are given an allocation to support their constituency.
“In fact, the government has launched a food programme and been with all segments of society, including non-governmental organisations and the opposition.
“Times are tough, and you must remember that there are pockets of our community, especially the vulnerable segment, that still need help.”
He said the government has also included a direct fiscal injection of RM10 billion under Pemulih, aimed at providing comprehensive aid to the people. – Bernama, July 19, 2021
