KUALA LUMPUR: The first step has finally been taken to enable the government to borrow more money to address the Covid-19 crisis.
The long-awaited Bill to raise the statutory debt limit was tabled for first reading at the Dewan Rakyat yesterday.
Under the Temporary Measures for Government Financing {Coronavirus Disease 2019 (Covid-19)} Bill 2020 the ratio of the country’s accumulated debt against its gross domestic product (GDP) is raised from 55% to 60%.
The Bill, to cover temporary spending and financing in order to deal with the impact of the outbreak, was tabled by Deputy Finance Minister Mohd Shahar Abdullah.
The higher debt ceiling will be in place only from the day the Bill is passed and gazetted until Dec 31, 2022.
Under the Bill, the total amount that can be raised and the total sum of money that may be received - in line with various provisions - will be increased from 55% to 60% of the GDP.
The Bill also provides for a RM45 billion fund to cover 29 stimulus programmes.
The government is seeking to backdate the enforcement of the provisions in the Bill and to validate all related sums paid since Feb 27. This is in line with the announcement of the first stimulus package of RM20 billion by then-interim prime minister Tun Dr Mahathir Mohamad.
The Bill will also see to the official establishment and application of the Covid-19 Fund, where money channelled to the fund will be used to support the economic stimulus packages and recovery plans announced by the government, as well as other related finances.
Clause 5 of the Bill provides explanations on how all the money raised can be used, while Sub-clause 5(1) seeks to ensure that the Covid-19 Fund shall only be used for the purposes of the programmes under the economic stimulus packages and economic recovery plans.
The RM45 billion fund can be used to finance:
* Wages and job retention, worker retention and worker hiring incentive and training programmes for which RM16.8 billion has been set aside;
* Prihatin aid of RM4 billion, and skilling and upskilling programmes of RM2 billion;
* SME grants of RM1.9 billion, micro credit loans under Bank Simpang Nasional and Tekun Nasional of RM1 billion; and
* Covid-19-related expenses incurred by the Health Ministry at RM1 bilion, and RM600 million for special allowances for frontliners and RM500 million to underwrite discounts on electricity bills.
