Malaysia: Govt has no intention to increase statutory debt level for now

• The MYR15bn PERMAI assistance package is expected to have a minimal fiscal impact on the country, and the government has no plans to increase the statutory debt level to more than 60% of the nation’s Gross Domestic Product (GDP) for now.
• Deputy secretary-general of Treasury (Policy) Zakiah Jaafar said the government remains committed to maintaining the fiscal deficit target at 5.4% of the GDP.
• “The government’s priority is to ensure spending according to the set limits, strict monitoring and in ensuring that the allocation reaches the target group,” she said during a TV programme on 25 Jan 21.
• Zakiah said despite the introduction of the PERMAI package, the federal government’s debt level is expected to remain manageable and not exceed the level that has been set as the government is still spending prudently.
• On the second Movement Control Order’s (MCO 2.0) impact on economic growth, she said there is no doubt it would affect the nation’s growth projections in 2021.
• “However, the impact is expected to be smaller compared to the previous MCO as almost all of the economic sectors are able to continue operating, in addition to the PERMAI assistance package which complements the previous stimulus packages.”, she opined.
• “At the same time, there are positive factors that can support our economic growth in 2021 including the higher oil prices around USD50-USD55 per barrel, compared to USD43 per barrel in 2020,” she added.
• Zakiah said oil prices are expected to remain stable, in line with demand trends and the expectations of economic recovery.
• Apart from that, the country’s exports have also returned to be on an uptrend, following the recovery of trade with major trading partners.
• She said the vaccination programme will also help towards the recovery of activities.
• Meanwhile, she said the government will do its best to avoid imposing a full MCO, where all economic activities will be suspended by halting all business and manufacturing activities.
• Zakiah said the country cannot afford to face a prolonged and more serious economic crisis.
• She assured that the government will act as soon as possible if necessary, if the situation changes.

External Link : https://www.theedgemarkets.com/article/permai-package-has-minimal-fiscal-impact-%E2%80%94-mof