Friday 23 Feb 2024
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KUALA LUMPUR (Oct 10): The Public Finance and Fiscal Responsibility Bill requires federal government guarantees to be capped at 25% of GDP, said Deputy Finance Minister I Datuk Seri Ahmad Maslan.

The Bill, to be tabled for the second reading in the Dewan Rakyat on Wednesday (Oct 11), also requires certain targets to be met for the fiscal deficit, federal government debt, and development expenditure, Ahmad Maslan told the press regarding the Bill at the Parliament building here on Tuesday.

At end-2022, Malaysia’s outstanding government guarantee, or contingent liabilities, stood at RM317.6 billion — or 17.8% of Malaysia’s 2022 GDP — which is similar to its annual average in the eight-year period since 2015.

The major recipients of the loan guarantees at end-2022 include DanaInfra Nasional Bhd (RM82.68 billion), Prasarana Malaysia Bhd (RM42.37 billion), Public Sector Home Financing Board (LPPSA) (RM42.25 billion), the National Higher Education Fund Corporation (PTPTN) (RM42.15 billion), and Malaysia Rail Link Sdn Bhd (RM30.85 billion).

The Bill also requires federal government development expenditure to be at least 3% of GDP. The component averaged at 4% per annum since 2015, Ahmad Maslan said.

Further, the Bill underlines the fiscal deficit cap of 3%, to be achieved in three- to five years. This compares with the annual average of 4.42% since 2015, lower than the 2023 projection of 5%, and 5.6% the year before.

On federal government debt, which stood at RM1.079 trillion or 60.4% of GDP in 2022, the Bill is drafted to cap this to 60% in the next three- to five years. The annual average since 2015 stood at 56.3% of GDP.

The Bill, if passed at both the lower and upper houses of Parliament, is hoped to be enforced “as soon as possible”, Ahmad Maslan said, although the Minister of Finance is given the mandate to determine when the law will kick off.

Malaysia is set to announce Budget 2024 on Friday (Oct 13), when headline figures on the government’s financial targets are typically announced.

In September, it released a report on the half-year review of Budget 2023, which said the performance has been “as planned”, as the government continues to ensure a strong and sustainable fiscal position while balancing the wellbeing of the community.

The half-year report will be made compulsory every year, upon the enactment of the public finance and fiscal responsibility legislation, Ahmad Maslan said.

For more Parliament stories, click here.

Edited ByKathy Fong
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