KUALA LUMPUR: The government's debt-to-gross domestic product (GDP) ratio is likely to reach 58.5 per cent by the year-end and not exceed the statutory limit of 60 per cent, said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.
He said the collective amount for the government-issued instruments from Malaysian Government Securities (MGS), Malaysian Government Investment Issues (MGII) and Malaysian Islamic Treasury Bills (MITB) stood at 58 per cent of GDP as at end-December.
"Limits for these types of debts are stipulated in specific Acts and have been applied since 2009, and not my own personal interpretation. Simply stated, the definition of statutory debt has not changed since 2009.
"Government debt is still below the statutory limit as stipulated by law. As at end-February 2021, the government's total debt was 54 per cent of GDP," Tengku Zafrul said in his 46th edition of the Laksana report today.
He said other debt instruments had had their own statutory limits and were still below the limits such as RM35 billion for external debt and RM10 billion for Malaysia Treasury Bills.
"The government's prioritised to help the rakyat and businesses face the challenges of Covid-19. Under normal economic circumstances, the government needs to balance between spending for the rakyat and managing the national debt," he said.
However, Tengku Zafrul said with the country in an economic crisis, the need to spend for the rakyat would be greater, naturally increasing the level of debt.
"As a result, the government has injected a total of RM340 billion into the economy through a series of stimulus packages. Although it has increased our debt, the total still does not exceed the statutory limit," he said.
The Finance Ministry, he said, would continue to monitor the country's debt to ensure it was under control to maintain the confidence of international investors and agencies.
"Without their confidence, the people will be negatively impacted by lack of jobs and business opportunities."
Tengku Zafrul said there were good debts and bad debts, adding that the former was a loan that government had taken to finance initiatives to help people and save jobs.
"Loans to develop infrastructure for the rakyat such as highways and other public facilities are also examples of good debts," he said.
Meanwhile, he said bad debt was debt that did not bring any economic benefit to the people such as legacy debts.
Tengku Zafrul said the government would still need to manage the legacy debts although it was not debts incurred by the current government.
"This is not an excuse for the government not to spend for the rakyat. The government still prioritises spending for the rakyat through the 6R Strategy- Resolve, Resilience, Restart, Recovery, Revitalise and Reform," he said.