malaymail.com 04 May, 2021 06:15 am

As govt debt rises, AMRO proposes broadening of tax to restore fiscal buffer for post-pandemic economic stability

As govt debt rises, AMRO proposes broadening of tax to restore fiscal buffer for post-pandemic economic stability
KUALA LUMPUR, May 4 ― Despite continued fiscal policy support amid the Covid-19 pandemic, Malaysia’s build-up in government debt underscored the need to restore fiscal buffers toward economic stability and resilience post-pandemic when the country’s economic recovery is on a firm footing, a...

KUALA LUMPUR, May 4 ― Despite continued fiscal policy support amid the Covid-19 pandemic, Malaysia’s build-up in government debt underscored the need to restore fiscal buffers toward economic stability and resilience post-pandemic when the country’s economic recovery is on a firm footing, a regional macroeconomic surveillance organisation said today.Asean+3 Macroeconomic Research Office (AMRO) economist Diana Del Rosario said one of the mitigation measures the Malaysin government could undertake was to implement reforms to broaden the tax base to lower the fiscal deficit and guide the government debt back to the pre‐pandemic statutory limit.“In terms of total government debt, the total debt would remain about 60 per cent to 2025 even as we assume a gradual pace of fiscal consolidation during this period.“So there is a need to enable a faster reduction in fiscal deficit and government debt ratios.

“Under the baseline scenario, the federal government debt ratio is estimated to remain above 60 per cent over the medium term,” it said.“The sizable fiscal package in response to the pandemic and the revenue shortfall due to the economic recession raised the fiscal deficit from 3.

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