PUTRAJAYA (March 18):  Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said today Malaysia's statutory debt is expected to hit 58.5% of gross domestic product (GDP) in 2021 due to the implementation of the RM20 billion PEMERKASA stimulus package to safeguard the nation's economic growth from the impact of the Covid-19 pandemic.

Speaking at a media briefing here today, Zafrul said that as of February this year, the nation's statutory debt stood at 54% of GDP.

"The forecast 58.5% figure is still under the 60% statutory debt limit and the absolute number of government debt is expected to reach RM975 billion," he said.

"Statutory debt has three instruments which include Malaysian Government Securities (MGS), Malaysian Government Investment Issue (MGII) and Malaysian Islamic Treasury Bills (MITB)," he said.

Zafrul said the government will exhaust and maximise the use of the RM65 billion ceiling for the Covid-19 fund approved by the Parliament under the Temporary Measures for Government Financing (Coronavirus Disease 2019 [Covid-19]) Act.

"The RM11 billion fiscal injection from PEMERKASA will result in the nation recording a higher budget deficit this year, but we intend to fully maximise (the use of) the Covid-19 fund approved by the Parliament accordingly," he said.

The national fiscal deficit is expected to increase to 6% this year from 5.4% last year, he said. Nevertheless, he remains confident that Malaysia has the ability to reduce the deficit through a fiscal consolidation agenda advocated by the ministry. 

Yesterday, it was reported that Prime Minister Tan Sri Muhyiddin Yassin unveiled a fresh round of stimulus under the RM20 billion PEMERKASA scheme after the Covid-19 pandemic sent the country's economy down its worst contraction last year (2020) since the Asian financial crisis.

Muhyiddin said the government would roll out RM20 billion worth of stimulus packages, including an RM11 billion fiscal injection, Reuters reported.

For 2020, Malaysia's economy, as measured by GDP, contracted 5.6% from a year earlier after GDP for the fourth quarter of 2020 (4Q20) contracted 3.4% year-on-year, according to Bank Negara Malaysia's (BNM) statement on Feb 11, 2021.

"The economy registered a negative growth of 3.4% in the 4Q20 (3Q20: -2.6%), largely attributable to the imposition of the (Covid-19-driven) Conditional Movement Control Order on a number of states since mid-October. 

"For 2020 as a whole, the economy contracted by 5.6%. The restrictions on mobility, especially on inter-district and interstate travel, weighed on economic activity during the 4Q20," BNM said.