Statutory debt needs to be increased for economy reopening

Govt remains committed to fiscal consolidation measures in the medium term

by AZREEN HANI / pic by BLOOMBERG

FINANCE Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz (picture) reiterated that there is a need for the government to increase the statutory debt, in light of the challenging pandemic situation.

“There is a need to increase the statutory debt limit to provide additional fiscal space to support the opening up of economic sectors and ensure a sustainable recovery.

Although this will increase Malaysia’s deficit target, which is estimated to increase between 6.5% and 7% of GDP in 2021, the government remains committed to fiscal consolidation measures in the medium term,” Tengku Zafrul said in a statement yesterday.

He added that the proposed enactment of the Fiscal Responsibility Act will also help improve governance, transparency and accountability in the country’s fiscal management.

On the upcoming Budget 2022, the minister said the Development Expenditure (DE) will be enhanced to drive socio-economic recovery activities and the national development agenda.

Among the Budget 2022 focus areas are to restore and rebuild the country’s resilience to deal with any potential crisis in the future by, among others, strengthening the public healthcare system.

“To this end, Budget 2022 will support the 12th Malaysia Plan (12MP) strategy to enhance the preparedness of our nation’s hospitals and intensive care unit capacity, which include joint venture efforts with private healthcare providers,” said Tengku Zafrul.

The second focus would be building national resilience through the concept of inclusivity, especially in terms of reducing the income gap among communities and development gaps between states, he added.

The Finance Ministry (MoF), he said, is committed to providing adequate fiscal allocation to finance the development expenditure of the 12MP for the period 2021 to 2025.

“MoF fully supports the objectives of the 12MP, which is a blueprint aimed at returning economic growth to a sustainable trajectory, strengthening socio-economic inclusivity and enhancing environmental sustainability,” the minister said.

The DE allocation for the 12MP is estimated at RM400 billion, a significant increase compared to RM248.5 billion for the 11MP.

Budget 2022 will focus on the digitalisation agenda that includes the implementation of 5G, Jendela programme and increasing digital adoption, especially among SMEs.

The 12MP’s focus on sustainable development will also be prioritised in Budget 2022 towards achieving net zero carbon emissions, such as through policies that promote electric vehicles.

With the launch of IR4.0, digitalisation and technology utilisation will be prioritised to enhance Malaysia’s long-term economic prospects and resilience, in line with the Malaysian Digital Economy Blueprint.

“This is also in line with the government’s structural reforms currently implemented in the medium term, including through the implementation of the National Investment Aspirations framework and government-linked investment company transformation initiative under the Perkukuh Pelaburan Rakyat programme,” Tengku Zafrul said.