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December 20, 2023

Malaysia Parliament Approves Law to Improve Government Fund Management

Malaysian economy
Malaysian economy
December 20, 2023

Malaysian legislators have recently passed the Public Finance and Fiscal Responsibility Law aimed at improving public finance management ahead of the upcoming fiscal year. As the government aspires to realize the ambitions of the market expansion initiatives it has outlined in 2023, strategic allocation of public funds and reduction of deficit spending will be crucial.

The legislation will specify specific limits for deficit spending and debt levels. The new law will also require annual development spending to be at least 3% of GDP. This was aimed to ensure the necessary fiscal space for growth initiatives in Malaysia, such as the National Industrial Master Plan (NIMP 2030).

Malaysia has already sustained a difficult fiscal year wherein deficit spending reached record levels, currency values plummeted to historic lows of 0.5% to 4.7703 per US dollar. Moreover, the federal debt ratio approached 63.8% in Q3 this year compared to 60.4% of GDP last year and it is estimated to slide down to 72.3% of GDP. The new legislation is expected to address the disarray.

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