KUALA LUMPUR,Mar 23: The government would be able to meet its debt obligation following the gradual reopening of the economy and the revitalisation of domestic consumption, the finance ministry said today.
Finance Minister Tengku Zafrul Aziz said economic growth is the key to ensure the government meets its debt obligation. He said Malaysia’s economy had shown some green shoots of recovery, attributed to effective policy measures.
Malaysia’s export sector remained robust, expanding in line with the revival of global trade, while a rebounding global economy also means higher commodity prices, a key part of the nation’s trade.
The National Covid-19 Immunisation Programme and other measures would help the economy move firmly towards recovery and revitalisation this year and the World Bank and the International Monetary Fund have forecast growth rates of between 5.6% and 6.7%, and 6.5% respectively.
Zafrul said a Fiscal Responsibility Act was being drawn up to strengthen the medium-term fiscal framework by reprioritising spending, improving our tax framework, tightening enforcement and minimising leakages.
“If more debt is required to support the rakyat and businesses, rest assured that its management is underscored by a firm and transparent commitment to fiscal discipline,” he said.
He said debt was necessary to save jobs and support businesses, and there had been unprecedented actions by governments around the world leading to substantial increases in fiscal deficit and government debt.
Malaysia’s response through four economic stimulus packages had cut unemployment to 4.9% in January from 5.3% in May 2020. Nearly 200,000 were placed in jobs and the government had saved 2.7 million jobs through wage subsidies paid to more than 330,000 employers.
The stimulus measures raised the fiscal deficit to 6.2% of gross domestic product in 2020, lower than the average deficit for emerging market and middle-income economies of 10.3% and lower than the 6.7% deficit at the height of the global financial crisis in 2009.
Malaysia’s economy contracted by only 5.6% for 2020, compared to Britain (-9.9%), the Philippines (-9.5%), the European Union (-6.2%), and Thailand (-6.1%), he added.