KUALA LUMPUR: Malaysia’s fiscal stance will remain expansionary this year to ensure that the recovery momentum is maintained, economic scarring is minimised, and the economy returns to its medium-term growth trajectory, says Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.

       As a result, the pace of consolidation would be gradual, he said.

       “We are confident that we will meet our 6% (deficit) target this year, or even lower, given the potential revenue upside from higher commodity prices as well as the recent tax revenue collection, which has nearly recovered to pre-pandemic levels,” he said in his keynote address at the Moody’s Inside Asean series: Rising fiscal in the wake of pandemic recovery yesterday.

       In 2021, Malaysia achieved a 6.4% deficit.

       Meanwhile, Tengku Zafrul said the federal government’s debt is expected to reach 66% of gross domestic product (GDP) by the end of this year, while statutory debt is estimated to be at 63%, well below the debt ceiling of 65%.

       The country will also continue to prioritise domestic market issuances, including the launch of a ringgit-denominated sustainable development goals instrument this year, with a targeted size of up to RM10bil.

       Accommodative monetary policy and a large domestic investor base would continue to support the government’s funding needs, he said.

       “To accelerate the resumption of fiscal consolidation and ensure the country’s debt affordability remains manageable, the government has undertaken efforts to implement additional reforms as the ministry aims for a deficit of 3% to 3.5% by the end of 2025.

       “This will be anchored by the introduction of the Fiscal Responsibility Act, which will ensure fiscal governance and medium-term sustainability as well as the adoption of the medium-term revenue strategy and the public expenditure review,” he said.

       Malaysia’s recovery and reform story, guided by Budget 2022 and the 12th Malaysia Plan, is based on the concept of a whole-of-nation approach, and all stakeholders would have a role to play in helping to build a better future for the nation, according to Tengku Zafrul. — Bernama