KUALA LUMPUR (Sept 28): There is a need to increase the statutory debt limit to provide additional fiscal space to support the opening up of economic sectors and ensure a sustainable recovery in the short term, said the Ministry of Finance (MoF).
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said this as the government remains committed to fiscal consolidation measures in the medium term despite the fact that it will increase the country's deficit target, which is estimated to increase to 6.5% to 7% of gross domestic product (GDP) in 2021.
In addition, the proposed enactment of the Fiscal Responsibility Act (FRA) will also help improve governance, transparency and accountability in the country's fiscal management, said Tengku Zafrul in a statement on Tuesday.
“The government’s current priority is to protect lives from the Covid-19 threat, and ensure the country’s economic growth prospects remain strong in the medium to long term.
“These priorities will not only be implemented in line with the 12th Malaysia Plan's (12MP) core thrusts and the Shared Prosperity Vision 2030, but also based on the principles of prudent financial management to meet the challenging Covid-19 situation, as well as to minimise long-term scarring of the economy due to the crisis,” he said.
Tengku Zafrul added that to ensure there is sufficient fiscal space to fund all development programmes under the 12MP, the government remains committed to fiscal consolidation measures based on the medium-term fiscal framework, supported by the medium-term revenue strategy to broaden the country’s tax base and increase the government’s affordability for its debt commitment.
Meanwhile, Tengku Zafrul noted that the MoF is committed to providing adequate fiscal allocation to finance the development expenditure of the 12MP for the period 2021 to 2025, following the tabling of the 12MP in Parliament on Monday.
He said the MoF fully supports the objectives of the 12MP, which is a blueprint aimed at returning economic growth to a sustainable trajectory, strengthening socio-economic inclusivity and enhancing environmental sustainability.
“In line with the 12MP’s theme, namely Keluarga Malaysia — Prosperous, Inclusive, Sustainable, the MoF will coordinate the priority areas of Budget 2022 to reflect the 12MP’s main focus areas. Budget 2022 will focus on recovery, rebuilding national resilience and catalysing reform or the 3Rs, namely Recovery, Resilience and Reform,” he said.
Tengku Zafrul pointed out that the development expenditure allocation for the 12MP is estimated at RM400 billion, a significant increase compared with RM248.5 billion for the 11MP, and that the development expenditure allocation for Budget 2022 will be enhanced to drive socio-economic recovery activities and the national development agenda.
Among the Budget 2022 focus areas, Tengku Zafrul said, is to restore and rebuild the country's resilience to deal with any potential crisis in the future by, among others, strengthening the public healthcare system.
“To this end, Budget 2022 will support the 12MP's strategy to enhance the preparedness of our nation’s hospitals and intensive care unit (ICU) capacity, which includes joint-venture (JV) efforts with private healthcare providers,” he said.
Another focus, Tengku Zafrul said, is building national resilience through the concept of inclusivity, especially in terms of reducing the income gap among communities and development gaps between states.
On a related note, Tengku Zafrul said the MoF will also catalyse reforms in line with the policies and strategies outlined in the 12MP. In this regard, he said, Budget 2022 will focus on the digitalisation agenda that includes the implementation of 5G, the National Digital Network (JENDELA) programme as well as increasing digital adoption, especially among small and medium enterprises (SMEs).
The 12MP's focus on sustainable development will also be prioritised in Budget 2022 towards achieving net zero carbon emissions, such as through policies that promote electric vehicles (EVs), he added.
Tengku Zafrul also said digitalisation and technology utilisation will be prioritised to enhance Malaysia's long-term economic prospects and resilience, in line with the Malaysia Digital Economy Blueprint, following the launch of the national policy on the Fourth Industrial Revolution (4IR).
“This is also in line with the government’s structural reforms currently implemented in the medium term, including through the implementation of the National Investment Aspirations (NIA) framework, as well as the government-linked investment company (GLIC) transformation initiative under the PERKUKUH Pelaburan Rakyat programme,” he said.