• Parliament approves raising government debt ceiling to 60% of GDP (from 55% of GDP) starting February 2020 and enforce until 31 December 2022
• Under the Moratorium on Loan Repayment, the value of the moratorium has increased to RM74.3bn as at 14th August, compared with RM70.5bn in previous week
• As for BNM's SME Soft Loans Funds, banks have approved loans worth RM10.1bn for over 22,143 SMEs, an increase of RM0.2bn from 21,759 SMEs in previous week

Government Is Commited to Preserve the Well-being of the Public

In the eighteenth update of the PRIHATIN and PENJANA stimulus packages announced this week, Ministry of Finance (MOF) guided that under the Moratorium on Loan Repayment, the value of the moratorium has increased to RM74.3bn as at 14th August, compared with RM70.5bn in the previous week. Of this total, RM26bn was utilised by business sector (from RM24.7bn in previous week) and RM48.3bn utilised by the public (from RM45.8bn previously). Separately, under BNM's SME Soft Loans Funds, banks have approved loans worth RM10.1bn for 22,143 SMEs, an increase of RM0.24bn from 21,759 SMEs in previous week. It was noted that more than 21,000 SMEs across Malaysia benefitted from this fund which helped retained over 400,000 jobs. Another measure to save local businesses was through PENJANA SME financing, as of 14 August 2020, a total of 803 applications have been approved, worth RM234.7 million. This was equivalent to 11% from the RM2bn allocation given by the banking sector, whereby 69% of the total approvals were from small size SMEs.

Meanwhile, as for the update on the Hiring Incentive Programme and Training Assistance, a total of 17,400 employees (an increase from 12,998 employees previously) have been successful in securing jobs since the commencement of the registration as at 15 June 2020. The reopening of the economy alongside the incentives disbursed to protect businesses and employees seemingly has stabilised the labour market condition. In fact, the government has been committed in enhancing the marketability of the youths and unemployed through training and upskilling programme, which estimated to benefit 200,000 youths and the unemployed. The details on the achievement of other initiatives can be found in the Appendix I and II.

MOF recently tabled the Temporary Measures for Government Financing (Covid-19) Bill on the RM45bn allocated for the economic stimulus packages and programmes. The proposed Bill was approved by the Parliament recently, which will temporary raise the country’s government borrowing ceiling rate to 60% of GDP (from the current 55% of GDP), starting February 2020 and enforce until 31 December 2022. The recent RM45bn fiscal injection raised the debt ceiling to about 56% of GDP according to

Finance Minister. The increase in debt ceiling will enable government financing for recovery plans and economic stimulus package as temporary relief in mitigating the impact of the pandemic to the public and local businesses. The previous increase of government debt ceiling was in 2009 (during the Global Financial Crisis), when it was raised by 10 percentage points to 55% of GDP. Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz mentioned that the Government would use domestic financial instruments in order to lower the risk of foreign exchange exposures and refinancing risk. Recently, the Government issued RM500m Sukuk Prihatin that aims to raise funds from corporate and the public in contributing towards Covid-19 fund. Prime Minister said that this is part of the 6R initiative launched by the government as an initiative to assist public and businesses affected by movement restrictions and Covid-19 pandemic. We believe the government’s effort to implement stimulus measures, especially in 2021 Budget announcement, will continue to support economic growth in 2H20 and 2021.

Source: Affin Hwang Research - 28 Aug 2020