KUALA LUMPUR, Aug 6 — Deputy Finance Minister Mohd Shahar Abdullah tabled today the government’s proposed law to enable emergency and stimulus spending related to the Covid-19 pandemic and to raise the country’s legal debt limit.
The Temporary Measures for Government Financing (Coronavirus Disease 2019 (Covid-19)) Bill 2020, among others, seeks to increase the legal limit for the national debt under the Loan (Local) Act 1959 and the total amount of moneys that may be received under the Government Funding Act 1983 specified in the Loan (Local) (Statutory Ceiling of Moneys Received) Order 2009 at the rate of 55 per cent of the Gross Domestic Product (GDP) is increased up to 60 per cent of the GDP, when calculated together.
However, the increase sought was temporary and the debt limit will return to 55 per cent as a ratio of the GDP on January 1, 2023.
The Bill also proposed a Covid-19 Fund to be incorporated into the Second Schedule of the Finance Procedure Act 1957 (Act 61) that will allow discretionary spending and allocations on matters related to Covid-19.
The proposed law included provisions to reallocate all money raised for this purpose towards the Development Fund specified in the Second Schedule of the Financial Procedure Act 1957 upon its expiry via a House resolution.
As for the supplementary supply portion, the bulk of the additional funds sought was for schemes such as wage subsidy, job retention and workers' hiring incentive and training assistance programmes at RM16.8 billion, followed by Bantuan Prihatin Nasional allocation at RM11.2 billion.
Apart from these, RM4 billion was for small scale projects and RM2 billion for Penjana SME financing, among others.
However, sums raised and funds received may only be applied to repayments of matured loans and payment into the Development Fund.
The proposed Bill will only come into effect from the date of its gazettement until December 31, 2022 and during this period the Loan (Local) (Statutory Ceiling for Borrowing) Order 2009 and the Government Funding (Statutory Ceiling of Moneys Received) Order 2009 will be suspended.
On July 16, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz said Malaysia's accumulated debt to GDP at the end of June this year was 53.2 per cent, below the set 55 per cent GDP limit.
However, just a month before his statement, Tengku Zafrul warned the Malaysia's debt level could hit the statutory limit of 55 per cent of th GDP at the end of the year following the implementation of measures to save lives, protect livelihoods and stimulate the economy in light of the Covid-19 pandemic.