THE government is adopting a prudent approach in spending, especially in terms of operating expenses, while at the same time optimising its income from investments and government-owned companies, said Prime Minister Tan Sri Muhyiddin Yassin.
He said that due to the COVID-19 crisis, the government has to face fiscal challenges, following a significant drop in tax revenue for 2020 as well as 2021.
“Malaysia is not (an) isolated (case). Countries globally are also facing a similar problem. But if we need to spend more to help the people, we have to find ways to do it,” he said in an interview with Bernama and local television stations ahead of the Budget 2021 to be tabled this Friday.
As such, the government has allowed the fiscal deficit to increase to 6% for 2020, in order to finance additional government spending in tackling the COVID-19 epidemic and economic stimulus package measures, PRIHATIN, PENJANA and KITA PRIHATIN.
It has also raised the debt-to-gross domestic product (GDP) ratio from the current statutory limit of 55% to 60%, which provides ample space for the government to implement an expansionary budget.
However, Muhyiddin said that once the economy becomes stronger and the government’s income stream improves, the government will strengthen its fiscal discipline. – Nov 4, 2020