He said that although the government’s debt ceiling was raised to 65% of gross domestic product (GDP), what was more important was the ability to repay the loan.
“If we were to pull the brake too fast, where we suddenly don’t want to spend or make an expansionary fiscal policy, our economy can’t recover faster than we expect.
“So, the government’s important responsibility is to ensure that its financial position remains stable so that it is ready and able to implement counter-cyclical measures in the event of a crisis,” he said in a special interview with Bernama TV and Astro Awani.
Tengku Zafrul said the government’s revenue projections were not enough for 2022 to fund all the programmes that were announced yesterday in the federal budget, especially for large projects.
Hence, the government would have a 6% deficit based on a GDP growth of between 5.5% and 6.5% next year.
“This is lower than this year’s deficit, which is expected to be 6.5%, but because our GDP is expected to improve next year, so it helps reduce the deficit rate even though we have an expansionary fiscal policy with a total allocation of RM332.1 billion.
“So, this 6% is about RM100 billion deficit that we have to pay through debt. Alhamdulillah, we have the ability to borrow next year,” he said.
Tengku Zafrul had said the government had expected 2021 to be a year of recovery and the 2021 budget was drafted before Covid-19 vaccines were produced, and before the appearance of new virus variants such as the Delta variant.
“So we cannot assume that this situation cannot happen (again). We must always expect it and we must have a Plan B,” he said in the interview tonight.
It was because of this that the Dewan Rakyat approved an increase in the limit of Covid-19 funds from RM65 billion to RM110 billion and raised the statutory debt ceiling of the government on Oct 11, he said.
With this approval, he said the government has had wiggle room to borrow more and spend more to help the people and ensure business continuity.
On the main challenges in preparing Budget 2022, Tengku Zafrul said it was to prepare a budget that could meet the needs of various parties, especially when the government had spent a lot of money to help the people and businesses pull through the trying times since last year.
The 2022 budget calls for total expenditure of more than RM332 billion with a focus on reviving every socio-economic segment: some RM233 billion is earmarked for operating expenditure, RM75 billion in development expenditure and RM23 billion for Covid-19 funds.
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