KUALA LUMPUR: Malaysia’s cabinet has proposed raising the government’s statutory debt ceiling to 65 per cent of gross domestic product, as part of measures to deal with the economic fallout of the COVID-19 pandemic, the finance minister said on Tuesday (Sep 14).
This is the second time in as many years that the government has sought to raise its debt ceiling. In 2020, it was raised to 60 per cent of GDP, the first increase since July 2009.
The cabinet has also proposed boosting the size of the government’s COVID-19 fund to RM110 billion (US$26.53 billion) from RM65 billion (US$15.67 billion), minister Tengku Zafrul Aziz said in a statement.
The two proposals will be tabled to parliament in October for approval and are aimed at strengthening the public health system, improving social aid measures, and providing support to businesses, he said.
The finance ministry has also directed banks to look into waiving interest payments for low-income borrowers that have received moratoriums on their loans, Zafrul added.
Malaysia cut its 2021 growth outlook twice this year as new coronavirus lockdown measures dampened its recovery, and now expects the economy to expand 3 to 4 per cent, down from an earlier projection of 6 to 7.5 per cent.
The government plans to table its budget for 2022 next month, aimed at prioritising post-pandemic recovery and reforms.