World News

Malaysia widens fiscal deficit target after coronavirus stimulus measures

KUALA LUMPUR (Reuters) – Malaysia expects its fiscal deficit to widen to 4% of gross domestic product this year because of the $58 billion stimulus measures announced to counter the impact of the coronavirus pandemic on the economy, the country’s finance minister said.

Malaysia has the highest number of coronavirus infections in Southeast Asia with more than 2,500 cases. Non-essential businesses have been closed, and travel and movement curbs are in place to contain the spread of the virus.

In an interview with state news agency Bernama on Friday, Finance Minister Tengku Zafrul Tengku Abdul Aziz said Malaysia’s fiscal deficit for 2020 would be wider than the 3.2% projected late last year.

“Given what’s happening today… we are assuming we will end up with around 4.0 per cent deficit,” Zafrul was quoted as saying by Bernama.

A finance ministry spokeswoman confirmed Zafrul’s remarks.

Last week, Prime Minister Muhyiddin Yassin said his government would roll out a 250 billion ringgit ($58 billion) economic stimulus package, including a 25 billion ringgit fiscal injection.

The rest of the funding for the stimulus would come from “government agencies and related parties within government ecosystem” and some local borrowings, Zafrul told Bernama.

He did not identify the government agencies.

State-linked companies have been told to “continue spending and accelerate”, he said, adding that big projects in the country must continue in a bid to boost the economy.

In another interview with the Astro Awani news channel, Zafrul said the government was projecting oil prices to be between $35 and $40 per barrel.

Malaysia had earlier expected oil prices at $60-$65 per barrel.

Malaysia relies on state-owned oil and gas firm Petronas for a portion of its revenue. Lower energy prices could lead to a drop in Petronas’ profit and the dividend it pays to the government.

(Reporting by Rozanna Latiff and Liz Lee; writing by A. Ananthalakshmi; Editing by Toby Chopra and Alex Richardson)