Govt has no legal ability to order blanket moratorium

by SHAHEERA AZNAM SHAH / graphic by MZUKRI MOHAMAD

THE government does not have the legal ability to instruct the banks to issue a blanket moratorium, said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

“The government does not control or own the banks. It is a discussion between the banks and Bank Negara Malaysia.

“We do not have the legal force on what the banks are offering. For now, all bottom 40 (B40) income groups who are affected by the lockdown will get automatic approval,” the minister said in a virtual press conference yesterday.

“Those who have lost their jobs, whether they are from the B40 or middle 40 (M40) income groups, will get approval. Similar to the small businesses. It is in the banks’ position to coordinate all of these.”

The RM40 billion Strategic Programme to Empower the People and Economy Plus (Pemerkasa+) continues the loan repayment and moratorium initiatives for the B40 group, micro to medium enterprises and individuals hit by the current Movement Control Order (MCO).

Tengku Zafrul said Malaysia could see a lower economic growth compared to the 6.5% to 7% anticipated by the government, taking into account the closure of the major economic sectors during the Full MCO period.

The government, he said, is measuring the economic impact of the lockdown and revising the country’s GDP.

“Our GDP will definitely be impacted by the closure of industries as announced by the government and National Security Council. It is still relatively at an early stage, but we are calculating the impact.

“Obviously, there will be revision required to the projected GDP growth due to the closure of major economic sectors.

“We have to see the sectors and companies that are affected and that would bring to the calculations of the revenue impact for each day. We have to look at it beyond the two-week period and for the whole year as we do not want to give a wrong signal,” he explained.

According to him, the full lockdown and Pemerkasa+ may result in a revision in Malaysia’s fiscal deficit and statutory debt.

“If we look at our position today, the definition of deficit and statutory debt depend on the GDP.

“There will be an impact on the fiscal deficit and debt limit as we revise the GDP. The fiscal injection of RM5 billion through the Pemerkasa+ assistance package would be funded through savings in expenditure or increasing borrowing.

“And of course, we have other options of looking at our dividends from the government-linked companies and statutory boards.”

At present, Malaysia’s debt stands at 58% of the GDP, just 2% below the debt ceiling of 60%.

“The government is looking at the three ways to fund the spending, savings on expenditure by reprioritising, increasing revenue from dividends derived from statutory bodies and goverment-linked companies, as well as borrowings,” the minister added.

Prior to the announcement of the total lockdown, he estimated that MCO 3.0, which was supposed to be enforced between May 25 and June 7, would incur 1% hit to the economy and lower the GDP growth estimates from 6%-7.5% to 5%-6% for 2021.