Debt ceiling: Prospects vs hazards

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The government is set to raise the country’s statutory debt ceiling – for the second time in just a little over a year – to 65% of gross domestic product (GDP), from 60% previously.

Malaysia last raised its statutory debt ceiling from 55% to 60% of GDP in August last year, and the Covid Fund size increased by RM20bn to RM65bn after Budget 2021 was tabled last November.

The Ministry of Finance says the increase will enable the government to fund RM45bn in extra spending on economic aid and stimulus packages. What might be the short-term and long-term implications of this move?

Astro Awani’s Melisa Idris and Sharaad Kuttan speak to economist and former UN assistant secretary general Dr Jomo Kwame Sundaram.

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