KUALA LUMPUR: A new law will be tabled in Parliament for better management of the nation's finances, particularly to cap the statutory debt limit to 65% of the country's gross domestic product (GDP), says Datuk Seri Ahmad Maslan (pic).
The Deputy Finance Minister said the legislation was needed as the country had outstanding debt of about RM1.5 trillion.
"The Fiscal Responsibility Bill will be tabled before the end of this year.
"Among the components of the proposed law is that the government cannot incur debt for operating expenditure. The funds must come from government revenue," he said at a press conference in Parliament on Wednesday (Feb 22).
Ahmad said that under the Bill, the government would be allowed to borrow for development expenditure.
"We are also looking at capping the Federal Government's statutory debt to 65% of gross domestic product (GDP)," he added.
Ahmad said that this was because the government had previously raised the statutory debt limit twice – from 55% to 60% of GDP during the Covid-19 pandemic and once more last year to 65%.
The Pontian MP also said that the new law would ensure that service charges for outstanding debts do not exceed 15% of the nation's annual budget.
"Previously, debt service charges used to be between 9% and 11% but this has risen to between 14% and 15%," he said.
He said managing the debt services charges was crucial to ensure more money could be used for development projects instead of just paying interest.
On Tuesday (Feb 21), Prime Minister Datuk Seri Anwar Ibrahim told Parliament that government liabilities and debts stood at almost RM1.5 trillion, or 82% of the GDP.
Anwar, who is also Finance Minister, said the debts comprised RM107.9bil in government debt, RM205.9bil commitments on loans, RM414.2bil for other liabilities and RM18.2bil for 1MDB.
In 2021, the government paid RM41bil as debt services charges with the amount estimated to increase to RM46bil this year.