KUALA LUMPUR: Malaysian Finance Minister Tengku Zafrul Abdul Aziz said on Friday (Sep 3) that he will propose to raise the statutory debt limit to 65 per cent from the current 60 per cent of the gross domestic product (GDP).
If approved by parliament, this would be the second time Malaysia’s debt ceiling has been raised in just over a year. The debt ceiling was raised from 55 per cent to 60 per cent in late August 2020. Prior to that, the debt ceiling had not been raised since the global financial crisis in July 2009, report agencies.
“Today, we are still below 60 per cent, at about 58 per cent 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 said during a press conference.
When asked if the government would consider foreign borrowings due to the limited fiscal space, Tengku Zafrul said that 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, according to the Bernama report.
While he admitted that the government has limited fiscal space, he said it has not stopped the government from continuing to expand its fiscal policy to support the economy.
The government has so far rolled out stimulus packages worth RM380 billion (US$90 billion) to mitigate the impacts of COVID-19.
Commenting on suggestions to reintroduce the goods and services tax (GST) in Budget 2022, Tengku Zafrul said the government is focusing on reviving the economy, and it is not the right time to bring back old consumption taxes like the GST.