KUALA LUMPUR – Taking on a debt to pay off another debt can sometimes be beneficial, said Deputy Finance Minister II Yamani Hafez Musa.
Speaking in the Dewan Rakyat today, Yamani explained that one of the strategies used by the government to settle the country’s debt is to take on new loans with lower interest rates.
“It is a rollover strategy. If we can be in debt with a lower (interest) rate than the earlier debts, we can use them to pay off the previous debts, which have higher rates.
“Whether or not it is for medium or short-term, we will carry it out if it is reasonable.
“The government is using this strategy to clear the country’s debts,” he said in a reply to Mahfuz Omar (Pokok Sena-PH) who asked about the point behind adding new debts to pay off old debts.
In his query, Mahfuz referred to debts caused by sovereign wealth fund 1Malaysia Development Bhd, which he stated had accumulated up to more than RM30 billion.
Addressing a query from Datuk Mohd Khairuddin Aman Razali (Kuala Nerus-PAS) on whether new taxes introduced by the government can help relieve the burden brought about by the country’s debts, Yamani said there is “no silver bullet solution” to solve the problem.
“We wish to find a creative way to collect revenue without affecting and giving too much damage to the economy as well as easing the debt burden,” he explained.
Previously on October 29, when tabling Budget 2022, the government had announced, among others, a windfall tax to be imposed on firms making exorbitant profits amid the Covid-19 pandemic.
“In the name of ‘Cukai Makmur’, companies with a taxable income of RM100 million will be subject to income tax at the rate of 24%, and the remaining taxable income will be subject to income tax at the rate of 33% for the year estimated 2022,” Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz had said.
This move is aimed to increase funds for those affected by the Covid-19 pandemic. – The Vibes, December 16, 2021
