KUALA LUMPUR – Malaysia’s fiscal stance is still set for expansionary this year, said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.
He said that the projection is to make sure that economic recovery momentum is kept while minimising economic scarring while also getting the economy to return to its medium-term growth trajectory.
Despite that, he explained that the pace of consolidation would be gradual as a result.
“We are confident that we will meet our 6% deficit target this year, or even lower, given the potential revenue upside from higher commodity prices as well as the recent tax revenue collection, which has nearly recovered to pre-pandemic levels,” he said in his keynote address at the ‘Moody’s Inside ASEAN Series: Rising Fiscal in the Wake of Pandemic Recovery’.
Last year, Malaysia achieved a 6.4% deficit.
Working together to ensure fiscal sustainability for Malaysia
Aside from that, Tengku Zafrul mentioned that the federal government’s debt is expected to reach 66% of gross domestic product (GDP) by end of 2022. He added that statutory debt is anticipated to be at 63%, below the debt ceiling set at 65%.
However, he said that the country will continue to prioritise domestic market issuances. This includes the launch of a ringgit-denominated Sustainable Development Goals instrument set for this year, with a targeted size of up to RM10 billion.
Accommodative monetary policy and a large domestic investor base would continue to support the government’s funding needs, he said.
“To accelerate the resumption of fiscal consolidation and ensure the country ‘s debt affordability remains manageable, the government has undertaken efforts to implement additional reforms as the ministry aims for a deficit of 3% to 3.5% by the end of 2025.
“This will be anchored by the introduction of the Fiscal Responsibility Act, which will ensure fiscal governance and medium-term sustainability as well as the adoption of the Medium-Term Revenue Strategy and the Public Expenditure Review,” Tengku Zafrul added.
He further said that Malaysia’s recovery and reform story, guided by Budget 2022 and the 12th Malaysia Plan, is based on the concept of a whole-of-nation approach, and all stakeholders would have a role to play in helping to build a better future for the nation.
Join our Telegram group for the latest updates!
Read more: RCEP starts for Malaysia with projected export gains of US$200mil
Discussion about this post