KUALA LUMPUR: Malaysia's parliament on Monday (Aug 24) approved the government's plan to raise its debt ceiling for the first time in more than a decade, as Southeast Asia's third-largest economy grapples with the economic fallout from the coronavirus pandemic.
Parliament voted to allow the government to borrow up to 60 per cent of gross domestic product as part of temporary measures to mitigate the effects of the pandemic on the public and local businesses.
The last time Malaysia raised its debt ceiling was in July 2009 during the global financial crisis, when it increased its maximum borrowings by 10 percentage points to 55 per cent of GDP.
The latest raising of the debt ceiling was part of a temporary Bill to enable government financing for economic stimulus packages and recovery plans and related matters.
The government under Prime Minister Muhyiddin Yassin has rolled out stimulus packages totaling around 295 billion ringgit (US$70.7 billion) this year to help the public and businesses weather the pandemic, finance minister Tengku Zafrul Aziz said when winding up the debate on the Bill in parliament.
That includes a fiscal injection of 45 billion ringgit, which raises Malaysia's debt ceiling to 56 per cent, he said.
Malaysia's economy plunged 17.1 per cent in the second quarter, its first contraction since 2009, as the pandemic ravaged business activity. Malaysia's central bank expects the economy to contract by between 3.5 per cent and 5.5 per cent this year as a whole.
Measures under the Bill expire at the end of 2022.