Govt looks to raise debt ceiling in newly tabled Covid-19 financing bill

PARLIAMENT | The government is seeking to raise the national statutory debt limit from 55 percent to 60 percent of the gross domestic product (GDP) to "accommodate additional borrowings" to finance economic packages related to the Covid-19 pandemic.

This is part of the Temporary Measures for Government Financing (Coronavirus Disease 2019 [Covid-19]) Bill 2020, tabled at noon at the Dewan Rakyat today, along with the official establishment and application of the Covid-19 Fund.

The bill covers the period of Feb 27, 2020, to Dec 31, 2022.

The debt limit refers to the sum of funds received under the Government Funding Act 1983 and the total ceiling sum raised under the Loan (Local) Act 1959.

The Covid-19 Fund will cover various stimulus packages which have been announced such as the Prihatin and Penjana packages.

The Prihatin and Penjana packages were announced in a bid to cushion the impact of the coronavirus outbreak amid the deteriorating global fiscal state and to revitalise the local economy.

The bill also lists out all the programmes under the economic stimulus packages and recovery plans worth RM45 billion.

This includes RM16.8 billion under the wage subsidy as well job hiring and retention scheme, RM11.2 billion for Bantuan Prihatin National, an RM1 billion allocation for Health Ministry Covid-19 related expenses, the RM2 billion Penjana SME financing, RM1.9 billion Prihatin SME grants, RM600 million special allowance for frontliners and RM500 million discounts for household electricity bills.

The new Perikatan Nasional government had received flak from opposition lawmakers for failing to allow debate on the economic stimulus packages, announced in stages over the past few months and worth a total of RM295 billion.

Instead, the fundings were pushed through without parliamentary oversight and approval.

However, the bill is also seeking to backdate and validate all related sums paid by the government from Feb 27 in line with the announcement of the first RM20 billion stimulus package announced by then-interim prime minister Dr Mahatahir Mohamad following the collapse of the Pakatan Harapan regime.

Any sum payable from the fund shall be paid within six months of the expiry of the act, with balance money to be then channelled to a development fund under the Financial Procedure Act 1957.