Reappointed Finance Minister Tengku Zafrul is mulling to raise the statutory debt limit to 65 per cent from the current 60 per cent of the gross domestic product.
Malaysia has kept its debt ceiling relatively under management, however with the governments commitment to introduce more support for the people and businesses, the debt-to-GDP ratio would probably increase to above 60 percent by year-end.
According to Zafrul, Malaysia is still below 60 percent, at about 58 per cent of statutory debt limit and even if its breached, it will be marginal.
But first the Ministry will have to raise the the proposal at the Cabinet level before presenting it to Parliament. At this moment Zafrul finds this a better option than foreign borrowing as there is currently ample liquidity in the market.
However, despite the government’s limited fiscal space, there is room to expand its fiscal policy to support the economy. Moving ahead all stimulus packages will be funded in this manner as well.
As of now about 97 percent of the government’s total borrowing is ringgit-denominated and only three per cent is in foreign currencies.
