KUALA LUMPUR (June 12): The Government is looking at raising RM35 billion in borrowings to finance the higher deficit brought about by the fiscal injections amid the challenges posed by the COVID-19 pandemic.

Finance Minister Tengku Datuk Seri Zafrul Aziz said this will be done entirely through local borrowings, adding that the local market is deep enough for the Government to raise funds.

“Our fiscal injection amounts to about RM45 billion and we have to borrow probably around RM35 billion. We have enough to tap the market and borrowing today is also cheaper, as BNM (Bank Negara Malaysia) reduced the OPR (overnight policy rate) by 50 basis points so we are able to tap the market,” he said.

Zafrul was speaking to the media after his first official visit to the Employees Provident Fund (EPF)’s office at Jalan Raja Laut here.

The Minister said the Government does not see any reason to tap foreign borrowings currently in view of the liquidity of the ringgit, although the Government still has room to raise foreign borrowings given its current exposure of around RM30 billion versus its limit of RM35 billion.

No request yet for special dividend from Petronas

Meanwhile, Zafrul said there has yet to be any request from the Government for a special dividend from Petroliam Nasional Bhd (Petronas).

The Minister pointed out that the latest Penjana stimulus package is expected to increase the fiscal deficit to between 5.8% and 6%, compared with the previous forecast of between 4.7% and 5% after the Prihatin package was announced.

In terms of economic growth, Zafrul said Malaysia will likely see negative economic growth for the second quarter of this year, given that the economy was operating at minimal capacity for a significant portion of the period, amid the Movement Control Order.

“GDP growth will be negative because we only opened up in May and it took about a month for workers to resume work,” he said, adding that the statistics department’s data showed that some 12.7 million workers have returned to work, translating to about 83% of the total workforce.

“If the momentum continues in the third quarter, we should see better growth going ahead. The growth of the economy also depends on the global economy. If the global economy improves, Malaysia, being an open economy, will also benefit,” he added.

Speaking about the EPF, Zafrul lauded the initiatives employed by the fund in reducing the burden of its contributors via the lowering of the statutory contribution rate from 11% to 7%, the i-Lestari programme (which allows contributors to withdraw RM500 per month over 12 months from their EPF Account 2), as well as the e-CAP initiative (which allows small-and-medium enterprises to defer employer contributions for the months of April, May and June).

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