He said although the statutory debt-to-GDP ratio is currently at about 58%, given the commitment made by the government to support the people and businesses, the debt-to-GDP ratio would probably increase to above 60% by year-end.
“Today, we are still below 60%, at about 58% 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 told a press conference today.
Asked if the government would consider foreign borrowings due to the limited fiscal space, Tengku Zafrul said 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.
However, Tengku Zafrul admitted that the government had limited fiscal space, but that had not stopped it from continuing to expand its fiscal policy to support the economy.
“We have seen how we have revised our spending to increase borrowings, and our deficit has gone up, which is forecasted to be up to 6.5-7.0%,” he said.
According to him, to-date, about 97% of the government’s total borrowing is ringgit-denominated and only three per cent is in foreign currencies.
On the re-introduction of the goods and services tax (GST) in Budget 2022, he said the government is focusing on reviving the economy, and it is not the right time to bring back old consumption tax like the GST.
He said the government is looking at ways to enhance its revenue and to address the issue of revenue leakages.
Meanwhile, commenting on the expectation that Malaysia would be able to enter the Covid-19 endemic phase by end-October this year, Tengku Zafrul said he hoped that all sectors would be allowed to resume operations by that time, albeit under the new normal state.
“Once we enter into the endemic phase, there would be changes in the standard operating procedure, but this will be discussed in the National Security Council meeting,” he said.
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