KUALA LUMPUR, Malaysia (June 29): According to Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, the government’s official GDP prediction for this year of between 6% and 7.5 percent will need to be reduced downwards. This, he explained, is due to the present Full Movement Control Order’s influence. The figures are still being worked on, according to the finance minister, who said the government will announce fresh official numbers in mid-August in conjunction with the release of data on Malaysia’s economic growth for the second quarter of 2021.
“We’re currently calculating the cost of keeping the current MCO in Phases 1, 2, and 3 [of the National Recovery Plan]. With the implementation of PEMULIH, Phase 4 may have a moderating effect on GDP “He went on to say that the newest stimulus package is likely to boost GDP by at least 2%.
As a result of the lower growth prediction, Zafrul predicts that the deficit would climb in lockstep with the GDP growth forecast. In mid-August, the deficit data will be released.
He also went into detail on the sources of finances for the government’s RM10 billion fiscal injection under PEMULIH, which will come from higher government revenue, partially from increasing dividends from statutory bodies and government-linked firms, cost-cutting, and borrowing.
The borrowings will most likely come from within the country, according to the minister, who also stated that there is still enough liquidity in the country for the government to do so.
When asked if the government will need to lift its statutory debt cap, Zafrul said the issue would be looked into based on the new GDP forecast, but that there is no immediate need to do so.
The minister stated that the Employees Provident Fund’s (EPF) i-Citra withdrawal mechanism will most likely have no influence on the liquidity capital markets, and that the amount involved should be “manageable.”
“The i-Citra program is not expected to affect the liquidity of the equities and bond markets, based on our experience with i-Lestari and i-Sinar. The total amount of i-Citra withdrawals is estimated to be over RM30 billion. It can be dealt with “he stated
Zafrul noted that a balance must be struck between supporting people with their immediate necessities and their future investments, and that the effort is a “win-win” for both those who need to withdraw funds and those who do not.
He claimed that around 8.7 million EPF members have sufficient resources to apply for the scheme, while he also pointed out that 3.7 million members now have less than RM5,000 in their EPF accounts, limiting their withdrawals to whatever is left in their accounts.
“It’s a problem with the structure. In the long run, we must assist in closing the gap, as people must save for their future. We are currently in the midst of a tremendous crisis, therefore we are doing everything we can to help people who are in need “He went on to clarify.
During the session, he also mentioned the six-month automatic blanket moratorium on bank loan repayments, stating that the moratorium is not interest-free, as was the case with the previous moratorium.
Meanwhile, he stated that the banks will be impacted, but that the sector will be able to weather the storm. Continue reading
