Putrajaya files Covid-19 bill, seeks to raise debt ceiling until 2023

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debt ceiling.

The Temporary Public Finance Measures (Coronavirus Disease 2019 (Covid-19)) Bill 2020, among other things, seeks to increase the statutory limit on national debt under the (Local) Loans Act 1959 and the total amount of money which may be received under the Government Finance Act 1983 specified in the (Local) Loans Order 2009 (statutory ceiling on money received) at the rate of 55% of gross domestic product (GDP) is increased to 60% of GDP, when calculated together.

However, the sought increase was temporary and the debt ceiling will return to 55% as a percentage of GDP on January 1, 2023.

The bill also proposes a Covid-19 fund to be incorporated into the Second Schedule of the Financial Procedure Act 1957 (Act 61) which will allow for discretionary spending and allocations on matters related to Covid-19.

The bill included provisions to reallocate all funds raised for this purpose to the Development Fund specified in the Second Schedule to the Financial Procedure Act of 1957 upon its expiration via a resolution of the House.

As for the additional supply portion, the bulk of the additional funds sought were for programs such as wage subsidies, job retention, and hiring incentive and relief programs. training workers at RM16.8 billion, followed by the Bantuan Prihatin Nasional allowance at RM11.2 billion. .

Apart from this, RM4 billion was earmarked for small scale projects and RM2 billion for Penjana SME finance among others.

However, the sums raised and the funds received can only be allocated to the repayment of loans due and to the payment to the Development Fund.

The proposed Bill will only come into force from the date of its publication until 31 December 2022 and during this period the Loans (Local) Order 2009 (statutory ceiling for borrowings) and the Public Funding Decree 2009 (statutory ceiling on sums received) will be suspended.

On July 16, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz said Malaysia’s accumulated debt to GDP at the end of June this year was 53.2%, below the set limit of 55%. of GDP.

However, just a month before his statement, Tengku Zafrul warned that Malaysia’s debt level could reach the statutory limit of 55% of GDP by the end of the year following the implementation of measures to save lives, protect livelihoods and boost the economy in light of the Covid-19 pandemic.

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