Govt seeks to gradually reduce fiscal deficit, rationalise targeted subsidies
Finance Minister Tengku Zafrul Abdul Aziz today assured that Malaysia is on track to meet the economic growth target of between 5.3 and 6.3 percent this year while calling talk of a global recession "premature and unwarranted”.
Speaking to the media at the ministry’s open house, he said Malaysia's economic growth would be supported by the government's expansionary fiscal policy as well as accommodative monetary policy...
Finance Minister Tengku Zafrul Abdul Aziz today assured that Malaysia is on track to meet the economic growth target of between 5.3 and 6.3 percent this year while calling talk of a global recession "premature and unwarranted”.
Speaking to the media at the ministry’s open house, he said Malaysia's economic growth would be supported by the government's expansionary fiscal policy as well as accommodative monetary policy.
He noted that Malaysia would see further growth momentum in the second quarter after recording a strong first-quarter gross domestic product growth of 5.0 percent.
"However, we remain wary of potential downside. There is a potential risk (due to) the war in Ukraine, high commodity prices and global monetary policy tightening. As a result, the government will need to ensure adequate fiscal flexibility in the future to manage such a risk.
"This is why we intend to gradually reduce the fiscal deficit from 6.4 percent in 2021 to 6.0 percent in 2022 and also rationalise the subsidies to be more targeted," he added.
Tengku Zafrul pointed out that failure to meet debt obligations was a major risk for countries in the event of a global recession but it was not a risk for Malaysia as the risk was mitigated due to its low exposure to external debt, with less than 3.0 percent in foreign currencies.
He added that Malaysia had ample liquidity to finance the government's and private sector’s borrowing needs.
‘T20 enjoying more oil subsidies’
Tengku Zafrul said the ministry was looking at ways to execute targeted oil subsidies.
"We have held engagement sessions with stakeholders and would bring (the matter) to the cabinet in the near future,” he said, adding that the current blanket subsidies benefited everyone, including the wealthy.
"The rich enjoy more subsidies based on their larger usage. For example, the bulk of the RM4 billion spent on petrol subsidies until March was actually enjoyed by the T20 (top 20 percent household income) group.
"For every RM1 of fuel subsidy, 53 sen went to the T20 group while only 15 sen benefited the B40 (bottom 40 per cent earners),” he added.
- Bernama
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