PETALING JAYA: Tengku Datuk Seri Zafrul Abdul Aziz, the finance minister of Malaysia, is all set to propose a new limit to increase the statutory debt limit from 60% to 65% of the gross domestic product (GDP).
The finance minister said that as per the promise made by the government to support the people and businesses. The statutory debt to GDP ratio is currently estimated at about 58%. Would probably rise to above 60% by the end of December.
In a press conference held yesterday, he said that we are at about 58% even below our statutory debt limit of 60%. If somehow we manage to cross it, it will be minimal unless we decide to go to the Parliament to increase the limit. They have planned on presenting the proposal in front of the cabinet next week. And it will be presented in the Parliament at the right time.
The finance minister was asked whether the government was planning on foreign borrowings due to the limited fiscal space. To which he immediately declined to say that the government will not borrow any kind of foreign currencies at the moment.
In the interview, he said that they have enough liquidity available in the market which can be tapped into. The ministry is confident with its liquidities and is looking to fund all the stimulus packages by tapping into the local ringgit market. They do not expect much impact in the local market of the funding.
Tengku Zafrul admitted to the government being low on fiscal space at the moment. However, the low fiscal space never restricted the government from the continuation of expanding the fiscal policy to support the economy.
He said that they calculated and adapted their spending to increase borrowings from foreign countries. And as a result, their deficit increased, which is predicted to be around 6.5% to 7%. According to him, Until now only 3% of the government’s total borrowing was in foreign currencies. And the rest 97% was ringgit denominated.
Tengku Zafrul also said that the re-introduction of the goods and services tax (GST) in Burget 2022 was solely focused on reviving the economy. And he believes that the timing chosen to bring back an old consumption tax like the GST is incorrect. He also added that the government is trying to find different ways. To increase its revenue and resolve the problem of revenue leakages.
Meanwhile, when asked about the expectation that whether the country would be able to begin their Covid-19 endemic phase October end of this year? The finance minister replied that he thinks all the sectors should be allowed to resume their operations by the October end of this year, although in the new normal state.
He said that once the country enters the endemic phase. The standard operating procedure would change significantly. Which will be discussed in the Malaysian National Security Council meeting.