KUALA LUMPUR: The government will be tabling a motion on raising its statutory debt limit from 60 per cent to 65 per cent of Gross Domestic Product (GDP) given the need for spending flexibility during this unprecedented pandemic crisis, the Ministry of Finance (MoF) said.

In a statement issued today following the second Fiscal Policy Committee meeting, it said the government's fiscal policy will continue to be centred on providing constant support in promoting a sustainable economic recovery and the smooth implementation of the recently announced 12th Malaysia Plan (12MP), 2021-2025.

MoF said the government remains committed to fiscal consolidation in the medium term as outlined in the 12MP, with a deficit target of 3.5 per cent of GDP by 2025.

"To achieve this, the committee also deliberated on the application of a variety of fiscal tools to balance the government's spending needs with fiscal sustainability.

"These measures include improving revenue collection, enhancing spending efficiency and managing debt more prudently and, to achieve long-term macroeconomic and fiscal stability, the committee agreed that medium-term fiscal consolidation will have to be more robust than previously planned, while keeping pace with expected economic recovery," it said.

MoF said the government has raised the deficit target to range between 6.5 per cent to seven per cent to GDP from the initial target of 5.4 per cent, taking into account additional fiscal injections in four assistance packages announced this year, namely PERMAI, PEMERKASA, PEMERKASA Plus and PEMULIH, totalling RM225 billion or 14.8 per cent of GDP.

Premised on the principle of transparency and accountability, the government has also released its inaugural Pre-Budget Statement, as well as four public consultation papers on procurement, direct cash assistance, tax incentives, and the Fiscal Responsibility Act for public feedback.

So far, the government has received over 1,000 feedback and comments, which will be duly considered, MoF said.

"The Ministry of Finance is currently consulting with and gathering inputs from various stakeholders in preparation for Budget 2022, scheduled to be tabled in Parliament on Oct 29, 2021.

"In the spirit of Keluarga Malaysia, the government is committed to assist all rakyat during the pandemic crisis, pursue a safe and systematic exit from the crisis as outlined in the National Recovery Plan, and foster a sustainable recovery under the upcoming Budget 2022.

"These efforts will also be aligned with the 12MP's medium-term macroeconomic strategies, designed to catalyse an inclusive and sustainable growth for all Malaysians," it said.

Chaired by the Prime Minister Datuk Seri Ismail Sabri Yaakob, the Fiscal Policy Committee meeting that was held for the second time this year discussed Malaysia's current economic conditions as well as the fiscal situation, medium-term fiscal projections, and debt position of the government.

The committee members include Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, Minister in the Prime Minister's Department (Economy) Datuk Seri Mustapa Mohamed, Chief Secretary to the Government Tan Sri Mohd Zuki Ali, Treasury secretary general Datuk Asri Hamidon, Economic Planning Unit director general Datuk Saiful Anuar Lebai Hussen, and Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus.

-- BERNAMA