Dewan Rakyat passes second reading of bill to raise statutory debt limit to 65%

KUALA LUMPUR (Oct 11): The Dewan Rakyat on Monday passed the second reading of the government’s bill to increase the statutory debt limit to 65% of gross domestic product (GDP) from 60% previously.

This new debt limit, under the Temporary Measures for Government Financing (Coronavirus Disease 2019) Amendment Act 2021 Bill, is to increase the funding for Covid-19 support measures by RM45 billion, as well as to finance projects under the 12th Malaysia Plan (12MP).

The bill, which seeks to increase the expenditure of the Covid-19 fund to RM110 billion from RM65 billion previously, was tabled for first reading in September.

The second reading of the bill, brought forward by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, was approved through a voice vote after being debated by more than 30 members of Parliament (MPs) from both the government and opposition.

In his winding-up speech in Parliament, Tengku Zafrul said the increase in the statutory debt limit will be in effect until Dec 31, 2022, after which the debt ceiling will return to its original limit of 60%.  

"If you look at Act 830, it will expire on Dec 31 next year. The limit power [of the bill] will expire at the same time. The statutory limits are enforced under the Loans (Local) Act 1959 (Act 637) and the Government Funding Act 1983 (Act 275).

"As I said earlier, in this case, if it is necessary to extend this period. This limit will be maintained at 65% to provide room for economic recovery," he added.

When tabling the bill for second reading earlier, the minister said the additional money for the Covid-19 fund was crucial for business continuity, economic recovery, and people's welfare, adding that the people would suffer if the bill was not passed.

"Most importantly, this will ensure continued support from all parties, especially to ensure that the low-income B40 group and affected Malaysian families receive assistance to ease their burden.

“It also aims to strengthen public health systems, particularly to contain transmission [and outbreaks of] Covid-19 and treat Covid-19 patients, and support economic continuity, especially for small and medium enterprises (SMEs) and micro-enterprises.  

"Apart from strengthening the country's economic situation, the situation is improving following the success of the National Covid-19 Immunization Program (PICK), legislative amendments and such increase in the statutory debt ceiling will also be more open to the oriented Budget 2022 allocation for the welfare of Malaysia, outlined by the diversity of business types and economic activity," he said.

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