KUALA LUMPUR: Former prime minister Datuk Seri Najib Abdul Razak (pix) has urged the government to raise the statutory debt limit from 55% of the gross domestic product (GDP), saying it would give the government sufficient physical space to implement aid schemes in order to stimulate the economy post-Covid-19.
Najib, also a former finance minister, said as of the end of the first quarter of 2020, the country’s debt stood at RM823.8 billion or 54.4% of GDP, with government guaranteed debt at RM280.4 billion.
Under the Loan (Local) Act 1959 (Act 637) and the Government Funding Act 1983 (Act 275), the government is prohibited from further borrowing when the country’s debt exceeds the statutory ratio of 55% of GDP.
Najib said the current crisis is the gravest economic crisis the country and the world have experienced in 100 years since the the Great Depression of the 1920s.
“It should be noted that it is easier for a business to close or to be declared bankrupt than to start a new business or to find investors.
“That is why we need to give priority to efforts to ensure existing businesses and jobs now under threat do not cease operations,” he said during the debate on the Royal Address at the Dewan Rakyat today.
The Pekan Member of Parliament said he is also urging Bank Negara Malaysia and the country’s banks to review the decision not to extend the moratorium on loan repayments.
“I am very worried that many companies and bank borrowers are unable to settle their monthly instalments when the moratorium period ends and are declared bankrupt,” he said.
The government had, under the Prihatin economic stimulus package, given a six-month moratorium until Sept 31 on all bank loan repayments. — Bernama
