Expansionary budget critical for recovery - BNM

“As you know for this year the government has already stated that we will have a fiscal deficit of 5.5-6.0 per cent and that is to be expected because fiscal measures are necessary," said Bank Negara Malaysia Deputy Governor Jessica Chew during a virtual briefing for business editors in conjunction with the release of the Financial Stability Review -- First Half 2020, today.

Chew said the measures are critical in the current environment to support the country’s recovery and the government remains committed to the consolidation over the medium term and it has a strong track record of delivering results over the medium to long term.

She said while the central bank is concerned over the increase in number of COVID-19 cases, it is confident of the measures introduced by the government, coupled with the open economy advocated by the country, which has been instrumental in employment creation and income growth.

“By and large, the economy is operating unlike before. And the external sector is also recovering. So, we might see in some countries the resurgent in number of cases but by and large if you look at the macro numbers, they are generally improving globally."

Malaysia has recently raised its debt-to-GDP ceiling to 60 per cent from 53 per cent and the revision was made following the anticipation of a higher fiscal deficit this year amid a fiscal injection into the economy, which stand at 20 per cent of its GDP.

Putrajaya had rolled out stimulus packages worth RM305 billion since the start of the pandemic to help the people and businesses tide over the impact of COVID-19.