Lim: Balance short-term fiscal gains with long-term revenue streams
PUTRAJAYA: Balancing shortterm fiscal gains and long-term revenue streams and growth is imperative to the Federal Government, says Finance Minister Lim Guan Eng.
“A mixed policy strategy has many stakeholders and we will ensure that they are all engaged and considered to ensure a thorough and balanced fiscal strategy that minimises negative impacts,” he said.
Lim outlined the measures to be taken in order to face the challenges following the abolishment of the Goods and Services Tax (GST), particularly the consequent shortfall in revenue and other related risks such as the outstanding tax refunds.
In a statement, he said the government would honour the GST refunds from next year, despite the financing constraint from a one trillion ringgit debt burden.
He said in order to manage the fiscal position, disbursements will be phased gradually.
“Payments for small businesses will be prioritised, as they are likely to be most affected by the delay in the refund,” he said.
Lim said the government has set up the Public Finance Committee with a mandate to strengthen public finances and drive the medium-term fiscal strategy, besides devising strategies and plans to manage fiscal challenges following the abolishment of the GST.
“The PFC will be the key platform in balancing between the obligations to be fiscally responsible while at the same time ensuring continuous spending and investment for our future economic growth,” he said.
On financing options, he said the priority is finding the lowest financing cost, with the timing and size of funds raised to be guided by the ability of the financial markets to absorb it in an orderly manner.
Lim said sovereign debt issuance is the simplest, most reliable and easiest method to manage due to the size of Malaysia’s institutional investors.
“The additional debt issuance will be gradual as well as transparent to the market via announcements through the auction calendar as per current practice.
“This will ensure that investors would be able to absorb the additional issuances without major adjustments in yields that could increase the borrowing cost of the Government,” he said.
Lim said a second option is for the Government to monetise some of its non-critical and nonstrategic assets by engaging in the sale of shares, land and leasing of idle strategic assets and buildings.
“We will ensure that this will be deployed in compliance with the highest standard of governance and transparency without disruption to the business community and the people,” he said. — Bernama