Fiscal Responsibility Act to cap ceiling on debt - Ahmad

 

The government's move to better regulate its finances through the proposed Fiscal Responsibility Act (FRA) could see no further increase being allowed beyond the maximum debt ceiling of 65 percent of the national GDP for developmental expenditures, said Deputy Finance Minister Ahmad Maslan.

Speaking to reporters at Parliament lobby, the Pontian MP said the 65 percent figure is currently in place and the proposed act will put a limit on further increases.

"Currently our total debt for development expenditures is at 60.4 percent of the GDP," said Ahmad (above), adding that the 65 percent rate had been increased from 55 percent and 60 percent during the Covid-19 pandemic.

"So we may propose for the amount to not be increased to more than 65 percent of the GDP," said the Pontian MP.

Ahmad said the government currently did not incur any debt for operational expenditures and the FRA will include a component to prevent any new debt for such purposes.

"The allocation for operational expenditure must come from government funds," he added.

He said the third component under the proposed act would be to impose a maximum ceiling on debt service charges at 15 percent of the national revenue.

The FRA was first mooted under the previous administration and then-finance minister Tengku Zafrul Abdul Aziz had reportedly set a year-end deadline to table the bill in Parliament.

Quizzed on the new tabling schedule, Ahmad declined to commit to a date beyond stating, "this year".

Prime Minister Anwar Ibrahim, who is also finance minister, last week in Parliament said that debt service charges for this year amounted to RM45 billion, representing 15 percent of the national revenue, and this is the maximum that the country can handle.

He said this was in the context of an RM1.5 trillion national debt, including liabilities, which needed to be urgently addressed including through fiscal reforms.

Anwar is scheduled to table his government's Budget 2023 tomorrow. - Mkini