Malaysia widens fiscal deficit target after Covid-19 stimulus measures

Datuk Seri Tengku Zafrul Tengku Abdul Aziz is pictured at Dewan Negara after being sworn in as senator March 10, 2020. — Picture by Yusof Mat Isa
Datuk Seri Tengku Zafrul Tengku Abdul Aziz is pictured at Dewan Negara after being sworn in as senator March 10, 2020. — Picture by Yusof Mat Isa

KUALA LUMPUR, March 30 — Malaysia expects its fiscal deficit to widen to 4 per cent of gross domestic product this year because of the US$58 billion (RM251.2 billion) stimulus measures announced to counter the impact of the coronavirus pandemic on the economy, the country’s finance minister said.

Malaysia has the highest number of coronavirus infections in South-east Asia with more than 2,500 cases. Non-essential businesses have been closed, and travel and movement curbs are in place to contain the spread of the virus.

In an interview with state news agency Bernama on Friday, Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz said Malaysia’s fiscal deficit for 2020 would be wider than the 3.2 per cent projected late last year.

“Given what’s happening today... we are assuming we will end up with around 4.0 per cent deficit,” Zafrul was quoted as saying by Bernama.

A finance ministry spokeswoman confirmed Zafrul’s remarks.

Last week, Prime Minister Tan Sri Muhyiddin Yassin said his government would roll out a RM250 billion economic stimulus package, including a RM25 billion fiscal injection.

The rest of the funding for the stimulus would come from “government agencies and related parties within government ecosystem” and some local borrowings, Zafrul told Bernama.

He did not identify the government agencies.

State-linked companies have been told to “continue spending and accelerate”, he said, adding that big projects in the country must continue in a bid to boost the economy.

In another interview with the Astro Awani news channel, Zafrul said the government was projecting oil prices to be between US$35 and US$40 per barrel.

Malaysia had earlier expected oil prices at US$60-US$65 per barrel.

Malaysia relies on state-owned oil and gas firm Petronas for a portion of its revenue. Lower energy prices could lead to a drop in Petronas’ profit and the dividend it pays to the government. — Reuters

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