KUALA LUMPUR – The country is unlikely to ever record a surplus fiscal budget in the future, as witnessed during Datuk Seri Anwar Ibrahim’s first stint as finance minister in the 1990s, the Dewan Negara was told.
This is owing to the extremely high direct debt incurred by the federal government, which currently stands at a staggering RM1.078 trillion, Deputy Finance Minister Datuk Seri Ahmad Maslan said when addressing the upper house today.
The last time the government’s fiscal budget remained in surplus was in 1997, when Anwar served as deputy prime minister and finance minister. He is currently prime minister while also taking up the finance portfolio for the second time.
“During a briefing with the Bank Negara governor (Tan Sri Nor Shamsiah Mohd Yunus) and the finance minister last Thursday, I was asked what is the ideal fiscal deficit.
“Before the governor could answer, the finance minister replied saying there is no ideal number.
“I then responded saying that the finance minister’s effort to achieve a balanced budget like he did when served the ministry (in the 1990s) is near impossible in the future,” he said.
“This is because of the federal government’s direct debt. I would like to state here that the figure is now at RM1.078 trillion.”
Ahmad said this when winding up on the government's Consolidated Fund (Expenditure on Account) Bill 2022.
He explained that the high federal debt is due to, among other things, the recent Covid-19 pandemic, which forced the government to increase its expenditure.
The rakyat’s financial burdens due to the ensuing lockdowns also meant that the government was not able to introduce new taxes to cushion the impact of its high spending.
“This was why Parliament decided to increase the statutory debt limit to 65% of the gross domestic product recently, because at that time, where else could we have looked for additional funds?”
Ahmad also pointed out that the majority of the government’s loans are from local financial institutions, with only about 3% of the overall debt involving foreign funds.
Regardless, the Umno lawmaker said the government is currently working hard to identify the best possible method to reduce the debt and current fiscal deficit of 5.8%.
“We can probably reduce it a little next year, but our efforts are towards identifying the best measure to increase revenue without having to burden the rakyat too much. These are among the finance minister’s important duties,” he said.
Earlier, Senator Mohd Apandi Mohamad had pointed out that the country continues to spend more than its revenue since 1997, forcing its debt to be increased year after year due to expenditure on emoluments and development. – The Vibes, December 21, 2022
