KUALA LUMPUR: Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz did not rule out the possibility of raising the government's debt ceiling over 60 per cent to gross domestic product (GPD) beyond 2021.
"Whether we (government) will increase it (debt ceiling level) again, depends on how we combat the Covid-19 pandemic," he said in an interview with TV3 tonight.
Tengku Zafrul said the government had previously agreed to increase the government's debt level from 55 per cent to 60 per cent to GDP. The decision was made during the parliament session in recent months.
"Currently, I think it is still sufficient (the debt ceiling). However, we expect the level to reach 56 per cent debt over GDP by end of 2020," he said.
Tengku Zafrul said for every 1.0 per cent increase in deficit, the country's debt is expected to increase to RM15 billion.
"There is room to increase the government's expenditure, as announced in 2021 Budget.
If we (Malaysia) were to increase the debt level from 60 per cent to 65 per cent, we are likely to accumulate about RM75 billion (additional debt of 5.0 per cent)," he said.
Tengku Zafrul said the government expected the country's debt to GDP level to increase close to 60 per cent by end of 2021.
The parliament had recently approved an allocation ceiling of RM45 billion for the Covid-19 Fund following the ongoing pandemic and requirements needed until 2022.
Under the 2021 Budget, the government proposed to raise the ceiling of the Covid-19 Fund by RM20 billion to RM65 billion, mainly to fund the Kita Prihatin package, additional assistance for the people's well-being, needs of front liners' and expected procurement of vaccine.
Meanwhile, he said the government had to act fast in balancing the responsibility of protecting the people and guaranteeing economic sustainability.
"We can use the existing fund and borrow to help rakyat. It is the government's commitment to spend to ensure resiliency of the economy and business continuity," he said.
Tengku Zafrul said the Perikatan Nasional administration had met with various opposition leaders and had recevied 6,600 proposals from industry players, chief ministers and state government as well as federal ministries before drafting the 2021 Budget.
"We know our focus for 2021 Budget is to help the rakyat and spur the economy," he said.
Economic recovery plans will be in phased based on 6R approach - Resolve, Resilience, Restart, Recovery, Revitalise and Reform.
"On the post 2021 Budget - we are open to criticism as we face unprecedented crisis not only for Malaysia but other countries.
"We have to improvise to give positive effect to the rakyat and the local economy."
Asked how the government will steer and help the rakyat if the pandemic continues to prolong, he said "It is hard to say. We do not know when we can get the vaccine.
"The latest positive news stated that the country may be able to get the vaccine at least by mid of 2021," he said.
Tengku Zafrul said the government has projected the economy to grow between 6.5 per cent and 7.5 per cent in 2021.
However, he said the local economy is expected to shrink to -4.5 per cent this year.
"However, Malaysians have to adhere to safety protocols so that our economy won't get affected by the Covid-19," he added.