KUALA LUMPUR (Jan 25): The RM15 billion 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.
"We are still at the beginning of the year, so we can still re-align government spending based on current priorities and through more prudent spending practices.
"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 Bernama TV’s "Ruang Bicara" programme tonight on the Malaysian Economic and Rakyat's Protection Assistance Package (PERMAI).
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 this year.
“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.
"At the same time, there are positive factors that can support our economic growth this year including the higher oil prices around US$50-US$55 per barrel, compared to US$43 per barrel last year," she said.
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 which is expected to start in March (phase 1), followed by phase 2 in May and phase 3 in September, 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.
"Basically, with the MCO 2.0, it is estimated that we may need between four to six weeks to flatten the Covid-19 curve to reach a level that can be accommodated by the current national health service system.
"Right now, we all should not take it easy. Whether employers, employees or entrepreneurs, whether individuals or households, make sure we follow the prescribed Standard Operating Procedures (SOPs) and social distancing measures,” she said.
She assured that the government will act as soon as possible if necessary, if the situation changes.
"Don't worry, we always have a Plan B," she said.