Government committed to cutting fiscal deficit to 3pc of GDP in 2015, says Najib

KUALA LUMPUR, Oct 21 — The government is committed to reducing the fiscal deficit to three per cent of gross domestic product (GDP) in 2015 and achieving a balanced budget in 2020, said Finance Minister Datuk Seri Najib Razak.

He said in line with fiscal consolidation, the government will ensure the deficit will decline to four per cent of GDP this year.

“The government is also committed to ensuring operating expenditure does not exceed revenue and loans are only to finance development expenditure.

“This commitment is important to ensure the debt level does not exceed 55 per cent of GDP besides ensuring the country’s fiscal sustainability in the long term,” Najib (picture) said in his written reply to Er Teck Hwa (DAP-Bakri) at the Dewan Rakyat here today.

Er had wanted to know the country’s current total debt and the debt to GDP ratio.

Najib said official projections of the federal government’s debt at the end of this year will be published in the Finance Ministry’s Economic Report 2013/2014 to be distributed in Parliament this Friday.

“The country’s debt comprises the federal government’s external debt, and those of the Non-Financial Public Enterprises (PABK) and private sector. In June, the country’s total debt stood at RM284.7 billion or 28.2 per cent of GDP,” he said.

However, he said, if the country’s debt is taken to mean the federal government debt, it would involve debt shouldered by the federal government from domestic and external sources.

“As of June this year, the federal government’s total debt was RM519.3 billion or 53 per cent of GDP.

“Of this total, RM502.9 billion or 96.8 per cent was domestic debt while the remaining RM16.5 billion or 3.2 per cent was external debt,” he said.

He said the low foreign debt was in line with the government’s policy of giving priority to domestic loans with high liquidity, low borrowing costs and minimum foreign exchange risks.

Najib said the government continues to implement prudent debt management with loans made after taking into account the ability to repay, adding all debt repayments so far have been made according to schedule.

“Last year, the total principal was RM62.2 billion while interest payment or debt service was RM19.5 billion or 9.5 per cent of operating expenditure,” he said. — Bernama