Alternative avenues of funding Malaysia’s deficit

Photo: Filepic/The Star

Although a policy consensus has emerged since the Covid-19 outbreak over the need for more government spending to come out of what are unprecedented times on a firmer footing, some are still jittery about what they perceive to be a dearth of viable sources of funding.

While it’s acknowledged, on the one hand, that the fiscal deficit needs to increase to accommodate greater direct injection by the government, on the other hand, there are still worries about Malaysia’s debt level, which has breached the self-imposed 60% ceiling to reach 60.7% of gross domestic product (GDP) – which translates to RM874.27bil – by the end of September. This is expected to go up to 61% in 2021 according to analysts. In the same vein, the country’s deficit is expected to be at least 6% as already anticipated, which it has to be noted and stressed is nothing out of ordinary, historically speaking.