Malaysia's 2020 fiscal deficit target a challenge: Finance Minister, Latest Business News - The New Paper

Malaysia's 2020 fiscal deficit target a challenge: Finance Minister

This article is more than 12 months old

KUALA LUMPUR Malaysia will find it challenging to meet its 3 per cent fiscal deficit target for next year due to uncertainties around the US-China trade war, the finance minister told Reuters in an interview yesterday.

South-east Asia's third-largest economy is dealing with a debt pile of over 1 trillion ringgit (S$330.70 billion) , which the administration of Prime Minister Mahathir Mohamad has blamed on mismanagement by the previous government.

Malaysia is also struggling with slowing economic growth, hurt largely by a global slowdown and the trade war between the US and China.

Finance Minister Lim Guan Eng said that while Malaysia can meet this year's fiscal deficit target of 3.4 per cent, next year's target of 3 per cent would be harder to meet.

"That will be challenging. Because (of) the uncertainties brought about by the trade war," Mr Lim said.

"There's a time lag effect. The full brunt of it, everyone expects it to hit next year."

Mr Lim said he was "cautiously confident" about meeting the government's full year growth forecast of 4.3 per cent to 4.8 per cent.

The central bank in May warned that weakening global demand and the US-China trade war are raising risks for Malaysia.

It cut interest rates by 25 basis points, Malaysia's first since July 2016, amid the growth concerns.- REUTERS