MIRI: The federal government debts and financial liability are projected to hit RM1.264 trillion by the end of 2020, based on the overall deficit for the year including financing the various economic stimulus packages, said Deputy Finance Minister 1 Datuk Abdul Rahim Bakri.
He told the Dewan Rakyat that Malaysia’s 2020 fiscal deficit is expected to increase by between 5.8 per cent and six per cent, following the country’s revenue reduction, a drop in crude oil prices worldwide, as well as increase in spending for the stimulus packages. The original fiscal deficit was 3.2 per cent
“Based on statutory report, the federal government debt currently is RM832.8 billion with a debt to gross domestic product (GDP) ratio of 5.36 per cent The government too is facing financial commitment such as RM166 billion to implement infrastructure projects such as public transport, LRT and Pan Borneo Sarawak, 1MDB debts amounting to RM32.6 billion and other financial liabilities totalling RM181.4 billion which included projects such as development of Putrajaya, police quarters nationwide and maintenance of government facility projects such as hospitals and roads,” he said
Abdul Rahim was replying to questions yesterday morning from Alice Lau Kiong Yieng (DAP-Lanang) who wanted to know the country’s debt and estimated revenue for this year. She also asked on measures taken by the government to restore the economy and increase the country’s revenue following the impact of the Covid-19 pandemic.
On revenue for this year as presented in Budget 2020, he said it was projected at RM244.5 billion based on the Brent world crude oil prices of USD62/barrel.
“However, with the current Covid-19 pandemic crisis and uncertainties in prices of commodities which have great impact on the government revenue, there will be reduction in the amount. Besides the current global low price of crude oil at USD41/barrel too will impact the revenue, the detailed review of it will be tabled during Budget 2021 in November 6,” he pointed out.
The deputy finance minister 1 added due to the Covid-19 pandemic and the Movement Control Order (MCO) which affected the economy, the government had taken proactive measures including economic stimulus packages besides giving tax incentives such as exemption of taxes and deferment of business tax payment for the tourism sector.
Among other short and long term measures taken are re-implementing fiscal consolidation such as consolidating the administration and taxes payment besides increased prudency in spending so as to reduce the need of borrowing, he said. To a supplementary question from Pontian MP Datuk Seri Ahmad Maslan, he said the government has the ability to repay the debts as it has good management of debts and high discipline in paying.
“The government has high fiscal discipline in paying debts because we ensure we have statutory limit of not more than 55 per cent although we strive to increase up to 60 per cent soon. We also ensure debt service ratio at 15 per cent of GDP,” he said.
As for the new source of revenue, Abdul Rahim told the Dewan Rakyat that the government is taking various steps to increase the revenue and at the same time reduce spending. He is confident it can be done once the Covid-19 pandemic is over and because the country’s economic fundamental is high. To a supplementary question from Alice, he told the House that current sovereign rating for Malaysia remains high of at least A-minus from all three international rating agencies.
He said the good rating showed that the international community has confidence in Malaysia’s economy and its ability to implement 80 initiatives in Prihatin and Penjana to spur economic growth.