Zafrul to propose raising statutory debt limit to 65pct

 

Finance Minister Tengku Zafrul Abdul Aziz will propose to raise the statutory debt limit to 65 percent from the current 60 percent of the gross domestic product (GDP).

He said although the statutory debt-to-GDP ratio is currently at about 58 percent, given the commitment made by the government to support the people and businesses, the debt-to-GDP ratio would probably increase to above 60 percent by year-end.

“Today, we are still below 60 percent, at about 58 percent of our statutory debt limit. Even if we breach it, it will be marginal, but we still have to go to Parliament to increase the limit.

“The plan is to present it (the proposal) to the cabinet next week, then we will bring it to Parliament at the right time,” he told a press conference today.

Asked if the government would consider foreign borrowings due to the limited fiscal space, Zafrul said the government would not borrow in foreign currencies for now.

“We have ample liquidity in the market that we can tap into. We expect to fund all the stimulus packages by tapping into the local ringgit market, and we have enough liquidity without being concerned about impacting the local market,” he said.

However, Zafrul admitted that the government has limited fiscal space, but that has not stopped it from continuing to expand its fiscal policy to support the economy.

“We have seen how we have revised our spending to increase borrowings, and our deficit has gone up, which is forecast to be up to 6.5-7.0 percent,” he said.

According to him, to-date, about 97 percent of the government’s total borrowing is ringgit-denominated and only three percent is in foreign currencies.

On the reintroduction of the goods and services tax (GST) in Budget 2022, the finance minister said the government is focusing on reviving the economy, and it is not the right time to bring back old consumption tax like the GST.

He said the government is looking at ways to enhance its revenue and to address the issue of revenue leakages.

Meanwhile, commenting on the expectation that Malaysia would be able to enter the Covid-19 endemic phase by end-October this year, Zafrul said he hoped that all sectors would be allowed to resume operations by that time, albeit under the new normal state.

“Once we enter into the endemic phase, there would be changes in the standard operating procedure, but this will be discussed in the National Security Council meeting,” he said.

- Bernama