Govt to table a parliamentary motion to raise statutory debt limit from 60% to 65% of GDP

By TMR / Pic by AFP

MORE favourable prospects of economic recovery seen for Malaysia in the near term on reopening of various economic sectors, according to the Finance Ministry (MoF).

The ministry added that Malaysia’s 2022 growth is expected to rebound in line with the recovery in the global economy and trade throughout the second half of 2021 and next year, particularly as more countries step up their vaccination efforts.

“Prospects for economic recovery in the near term appear more favourable, supported by the National Recovery Plan’s (NRP) systematic reopening of various economic sectors, including social activities such as dining-in and tourism,” the MoF said in a statement post the Fiscal Policy Committee meeting yesterday.

The committee met for the second time this year to discuss Malaysia’s current economic conditions as well as the fiscal situation, medium-term projections and the government’s debt position.

It was chaired by Prime Minister Datuk Seri Ismail Sabri Yaakob, with committee members including the minister of finance, minister in the Prime Minister’s Department (economy), the chief secretary to the government, the secretary general of the Treasury, the DG of the Economic Planning Unit and the governor of Bank Negara Malaysia.

“Of immediate priority is restoring the nation’s potential growth capacity to allow communities and businesses to adjust to new norms, as well as to invest for future growth and better job opportunities.

“Given the need for spending flexibility during this unprecedented pandemic crisis, the government will table a motion during the current parliamentary sitting to raise its statutory debt limit from 60% to 65% of GDP, “ the MoF added. Meanwhile, the government remains committed to fiscal consolidation in the medium term as outlined in the 12 Malaysia Plan, with a deficit target of 3.5% of GDP by 2025.

To achieve long-term macroeconomic and fiscal stability, the committee agreed that medium-term fiscal consolidation will have to be more robust than previously planned, while keeping pace with expected economic recovery.