KUALA LUMPUR: Malaysian Finance Minister Tengku Zafrul Abdul Aziz mentioned on Friday (Sep 3) that he’ll suggest to lift the statutory debt restrict to 65 per cent from the present 60 per cent of the gross home product (GDP).
If accredited by parliament, this may be the second time Malaysia’s debt ceiling has been raised in simply over a 12 months. The debt ceiling was raised from 55 per cent to 60 per cent in late August 2020. Previous to that, the debt ceiling had not been raised for the reason that world monetary disaster in July 2009.
The minister was reported as saying by Bernama that though the statutory debt-to-GDP ratio is at the moment at about 58 per cent, the determine would most likely improve to above 60 per cent by the top of the 12 months.
“At present, we’re nonetheless beneath 60 per cent, at about 58 per cent of our statutory debt restrict. Even when we breach it, it will likely be marginal, however we nonetheless should go to parliament to extend the restrict.
“The plan is to current it (the proposal) to the Cupboard subsequent week, then we’ll deliver it to parliament on the proper time,” he mentioned throughout a press convention.
When requested if the federal government would take into account overseas borrowings as a result of restricted fiscal area, Tengku Zafrul mentioned that the federal government wouldn’t borrow in foreign exchange for now.
“Now we have ample liquidity out there that we are able to faucet into. We anticipate to fund all of the stimulus packages by tapping into the native ringgit market, and we have now sufficient liquidity with out worrying about impacting the native market,” he mentioned, in keeping with the Bernama report.
Whereas he admitted that the federal government has restricted fiscal area, he mentioned it has not stopped the federal government from persevering with to develop its fiscal coverage to assist the financial system.
“Now we have seen how we have now revised our spending to extend borrowings, and our deficit has gone up, which is forecasted to be as much as 6.5 per cent to 7.zero per cent,” he mentioned.
In accordance with the minister, about 97 per cent of the federal government’s complete borrowing is ringgit-denominated and solely Three per cent is in foreign exchange.