‘Government ready to expand fiscal space if necessary’

KUALA LUMPUR: Malaysia’s fiscal deficit is expected to go up to between 6.5 and seven per cent of the gross domestic product (GDP) this year from the six per cent targeted earlier after factoring in the recent stimulus packages.

Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz said the government was ready to expand the fiscal space whenever necessary to support the economy and the people.

“We have a deficit that is going to reach seven per cent. It’s not about the size of the deficit; it’s the ability to borrow and the size of the reserves.

“Although Malaysia is ‘A’-rated, in terms of our fiscal reserves, we are smaller than many other ‘A’rated countries. The only difference is that we have strong growth prospects,” he said in an interview with the South China

He said the country recorded its highest-ever deficit in 20082009 (at 6.7-6.9 per cent).

He said at the end of the day, the most important thing was whether the country was giving adequate support to the people.

“I feel that the support the government has given — despite the fiscal constraints that we have — is adequate.

“You must also look at our debt service coverage ratio and the liquidity of the domestic institutions today.”

Asked if the “white flag” campaign initiated by the people suggested that the government’s stimulus packages were not working, Tengku Zafrul said he did not believe that was the case.

“We have addressed some of those issues by ensuring that all elected representatives are given an allocation to support their constituency.”