PUTRAJAYA: Malaysia's fiscal deficit to gross domestic product (GDP) is expected to remain at 6.0 per cent this year, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said.
This follows the government's RM20 billion additional economic stimulus package under the Strategic Programme to Empower the People and Economy (Pemerkasa).
Tengku Zafrul said the government would maximise the RM65 billion from the Covid-19 Fund approved by Parliament last year.
"Because of that, we will record a higher deficit from the initial target of 5.4 per cent in the 2021 Budget to 6.0 per cent of the GDP this year," he said at a special briefing on Pemerkasa with selected media here today.
Tengku Zafrul said the government assured that the local economy would still be functioning amid the ongoing pandemic.
The government's fiscal deficit was at 6.0 per cent of GDP in 2020, the largest gap since the global financial crisis in 2009.
The widening deficit is attributed to the additional stimulus packages to lift the country's economy out of the doldrum plus lower GDP as a result of the Covid-19 outbreak.
Of the total RM20 billion allocated for Pemerkasa, RM11 billion will be a direct fiscal injection from the government.
"Additional fiscal injection of RM11 billion will raise our debt. It will come from both Covid-19 fund. Whatever related to Covid-19, we will use from the fund. Anything that is not Covid-19 related will come from normal means," Tengku Zafrul said.
He said the RM11 billion fiscal injection would be sourced from domestic borrowings.
"We plan to issue green sustainable sukuk to refinance our current US dollar denominated bond that will be expiring in July," he said.
Tengku Zafrul said additional stimulus package would push government debt to about 58.5 per cent of GDP this year.
However, he said the level would still remain below the 60 per cent statutory limit.
Tengku Zafrul said 97 per cent of government's debt was in ringgit-denominated, while the remaining three per cent was in foreign note borrowings.
Meanwhile, he said the government was looking at options to widen its revenue base but it was not the "right time" to introduce any new tax.
"We look at diversifying the government's revenue. However, we are still studying all type of taxes. The timing is important and with the economy recovering, it is not the right time to introduce new tax or changes in taxes. Instead, we will focus on revitalising the economy," he added.