Kuala Lumpur, 7 August 2020 – IDEAS welcomes the tabling of the Temporary Measures for Government Financing (Covid-19) bill to Dewan Rakyat on 6 August 2020. It is the right step to maintain parliamentary oversight on government finances. The bill will allow the government to increase the debt limit from 55% to 60% of GDP until the end of 2022 to provide the government with adequate fiscal space to deal with the current public health crisis. The bill will also pave the way to set up a Covid-19 Fund which will allow discretionary spending for Covid-19 related purposes.
“The government needs adequate fiscal space to tackle the current crisis without having to worry about transgressing financial rules, and the Covid-19 bill is, therefore, a step in the right direction to achieve this objective”, Tricia Yeoh, IDEAS CEO, commented.
However, she further added, “The Minister of Finance needs to also table to Parliament and publish the total estimates of borrowing that will be raised for the purpose, their interest rates, and sources of the borrowing, whether domestic or foreign. The total estimates of outstanding debt as a result of this new borrowing should also be tabled. This information will be useful to allow MPs to judge whether the increase in the debt limit is necessary or even adequate to tackle the crisis. Additionally, this will allow MPs and the public to assess the risks of these borrowings on government finances”.
According to the 2019 Open Budget Survey and IDEAS 2020 Interim Transparency Score released in late April 2020, Malaysia’s fiscal transparency has increased from 46 in 2017 to 47 in 2019 and is projected to increase to 52 in 2020. The disclosure of government guarantees and contingent liabilities in the Fiscal Outlook Report and evaluation of Malaysia’s debt sustainability partly contributes to the score improvement. But the survey shows that disclosure of the budget year’s debt estimates is still limited. Tricia adds, “The publication of such information to accompany the tabling of the Covid-19 bill would set a good precedent for future fiscal transparency”.
On the Covid-19 Fund that will be set up under the bill, Tricia comments on the need to ensure sufficient means for public monitoring, saying, “Disclosure of the use of the fund should be reported regularly to the public. It can be incorporated into the current LAKSANA report. Such disclosure can ensure the stimulus package expenditures are open to public scrutiny and are spent efficiently.”
For information about the IDEAS 2020 Interim Transparency Score on Malaysia, please visit:
For information about Malaysia’s score in the 2019 Open Budget Survey, please visit:
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