KUALA LUMPUR (June 29): The government's official gross domestic product (GDP) forecast of between 6% and 7.5% this year will need to be revised downwards, according to Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz. This, he said, is due to the impact of the current Full Movement Control Order.

During a briefing with the media today, the finance minister said the figures are still being worked on, with the government announcing new official numbers in mid-August, in conjunction with the release of data on Malaysia's economic growth for the second quarter of 2021.

"We are now studying the cost of having the current MCO under Phase 1, Phase 2 and Phase 3 [of the National Recovery Plan]. Phase 4 may have a mitigating impact on GDP with the introduction of PEMULIH," he noted, adding that the latest stimulus package is expected to give at least a 2% uplift to GDP.

As the growth forecast will be lower, Zafrul said the deficit will also rise in tandem with the downgrade in GDP growth expectation. The deficit figures will also be announced in mid-August.

He also elaborated on the sources of funds to cover the government's RM10 billion fiscal injection under PEMULIH, which will come from an increase in government revenue, partly from increased dividends from statutory bodies and government-linked companies, optimisation of expenditure, and an increase in borrowings.

The borrowings will likely be sourced domestically, with the minister adding that there is still sufficient liquidity in the country for the government to do so.

Asked if the government will need to increase its statutory debt ceiling, Zafrul said the matter will be studied based on the new GDP forecast, although he said there is no current need to raise the limit.

On the Employees Provident Fund's (EPF) i-Citra withdrawal facility, the minister said that it will likely not impact the liquidity capital markets, adding that the quantum involved should be "manageable".

"Based on our experience with i-Lestari and i-Sinar, the i-Citra programme is not expected to impact the liquidity of the equity and bond markets. The quantum of withdrawals via i-Citra is about RM30 billion. It is manageable," he said.

A balance between assisting the people's current needs and their savings for the future has to be found, Zafrul said, adding that the initiative is a "win-win" between those that need to withdraw their funds and those that choose not to take out their savings.

He said approximately 8.7 million of EPF members have sufficient savings to apply for the programme, although he also noted that 3.7 million members currently have less than RM5,000 in their respective EPF account, meaning that they can only take out whatever's left in their account.

"It's a structural issue. In the long term, we need to help address the gap as people need to save for their future. Today we are facing a major crisis, so we do what we can to assist those in need," he explained.

He also touched on the six-month automatic blanket moratorium on repayments of bank loans during the session, saying that the moratorium is not interest-free, similar to the previous moratorium granted.

Meanwhile, he said the banks will be affected by this but gave the assurance that the sector will be able to take the hit.