• Under PRIHATIN, the one-off cash assistance that includes BPN, BSH, government retirees, students, tourist guides and others that amounted RM14.7bn, the implementation rate is at 94%.
• Under PENJANA package, the one-off cash assistance such as e-Penjana and others, the amount involved RM647mn with 68% implementation rate.
• Moratorium on Loan Repayment increased by RM3.82bn to RM97.26bn, compared with RM93.44bn in previous week, where a total of RM34.04bn was utilised by business sector (from RM32.7bn in previous week) and RM63.22bn utilised by the public (from RM60.74bn).

Government Debt-to-GDP Will be Around 56% of GDP by End 2020

In a recent interview, Finance Minister (FM) YB Tengku Dato’ Sri Zafrul Aziz guided that, Malaysia’s debt level is expected to rise as the country is rolling out measures to support citizens and businesses in facing economic fallout due to Covid-19 pandemic. FM reiterated that the country’s fiscal deficit target will be around 5.8-6.0% of GDP this year, where fiscal injections from the stimulus packages stand at around 20% of GDP. Government’s debt-to-GDP ratio will be around 56% of GDP by end 2020 (from 53% of GDP currently). As the government’s debt ceiling was raised from an earlier self-imposed 55% of GDP to 60% of GDP, this will allow the government some flexibility to unveil an expansionary 2021 Budget in supporting the domestic economy next year. We believe the government’s domestic debt will increase to around 60% of GDP by end-2021, as part of the effort to help businesses and support households from Covid-19, as well as ensuring the sustainability of the recovery in the domestic economy next year.

In the latest 24th update of the PRIHATIN and PENJANA stimulus packages, MOF highlighted on the success rate on the implementation status of PRIHATIN and PENJANA. In particular, under PRIHATIN, the one-off cash assistance that includes BPN, BSH, government retirees, students, tourist guides and others that amounted RM14.7bn, where the implementation rate was at 94%. Meanwhile, for the 3-6 months initiatives such as wage subsidy (phase 1), moratorium, EPF’s e-CAP and others involving RM108bn, the implementation rate was at 85%. Under PENJANA package, the one-off cash assistance such as e-Penjana and others, the amount involved RM647mn with 68% implementation rate. Meanwhile for the 3-6 months initiatives such as My30, PEKA B40, extended wage subsidies (phase 1) involving RM4.27bn, the implementation rate was at 43%.

Other updates included measures to help SMEs increase funds in order to provide access in alleviating short term cash flow burdens, where BNM's SME Soft Loans Funds as of 25 September, banks have approved loans worth RM10.67bn for 22,984 SMEs, an increase of RM0.07bn from 22,925 SMEs in the previous week. Further measures to assist local businesses are through PENJANA SME financing where, as of 25 September 2020, a total of 3,351 applications have been approved (from 3,064 in the previous week), worth RM795.3mn (RM744.5mn in the previous week). This was equivalent to 40% from the RM2bn allocation. Applications approved in the Wage Subsidy Programme (WSP) increased to 2.633mn workers as at 25 September, as compared to 2.628mn workers in previous week, where RM11.93bn was approved (RM11.929bn in the previous week). This was equivalent to about 86.4% of the total RM13.8bn allocation.

As at 25 September, Moratorium on Loan Repayment increased by RM3.82bn to RM97.26bn, compared with RM93.44bn in previous week, where a total of RM34.04bn was utilised by business sector (from RM32.7bn in previous week) and RM63.22bn utilised by the public (from RM60.74bn).

Source: Affin Hwang Research - 8 Oct 2020