KUALA LUMPUR, May 13 — Malaysia has a good track record with regards to fiscal consolidation, and the government has a proven track record of continuous commitment to medium-term fiscal consolidation plan, said Bank Negara Malaysia (BNM).
According to BNM governor Datuk Nor Shamsiah Mohd Yunus, the government had embarked on fiscal consolidation in 2010, and since then, the fiscal deficit of the gross domestic product (GDP) has been reduced to 3.4 per cent in 2019 from 6.7 per cent in 2009.
“The gradual fiscal consolidation over the years allowed the government to build the fiscal space needed to support the economy during economic slowdowns.
“In the event where there is a need for further economic stimulus, the government could opt to issue additional borrowings within the space it has built over the years,” she told a virtual press conference in conjunction with BNM’s announcement on the First Quarter 2020 GDP, today.
On sovereign ratings, Nor Shamsiah said the ratings in several developing and advanced economies had been revised due to weaker growth prospects and fiscal position amidst the Covid-19 pandemic.
“My message for rating agencies is not to overly focus on headline numbers of the fiscal deficit, but more on what we have done to deliver a swifter rebound post-Covid-19 in the new normal,” she said.
She added that the ratings should highlight fiscal response in this unprecedented crisis, taking into account the targeted response and the timeframe.
Last month, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said the country’s 2020 budget deficit is expected to increase to 4.7 per cent after the government introduced the RM260 billion Prihatin Rakyat Economic Stimulus Package (PRIHATIN) aimed at mitigating the Covid-19 impact. — Bernama