• The stimulus package comprises RM230bn announced on 27 March + RM20bn announced on 27 Feb

• The RM250bn is the largest stimulus package and brings the size of the government’s fiscal stimulus to 17% of GDP

• One-off cash aid for M40 and below

• Additional incentives for government staff in Covid-19 frontline, e-hailing drivers

• Banks offer financial assistance for customers affected by Covid-19

• Additional incentives to assist businesses and SMEs

The Malaysia government has delivered a second stimulus package, named Pakej Rangsangan Ekonomi Prihatin Rakyat or PRIHATIN, worth RM250 billion or 17% of the GDP to deal with the Covid-19 outbreak. As a result of the PRIHATIN stimulus package, fiscal deficit is estimated to increase to 4.9% of GDP as compared to the revised 3.4% (after 27 Feb stimulus package) and original target of 3.2% of GDP.

The package comprises RM128bn to protect the welfare of the people, RM100bn to protect the welfare of small and medium enterprises (SMEs) and RM2bn to strengthen the country’s economy, on top of the RM20bn stimulus that was earlier announced on Feb 27(see Appendix 1).

Though RM250bn would seem like a massive amount for the government to take on, the actual amount of fiscal spending amounts to RM25bn.

Source: BIMB Securities Research - 30 Mar 2020