KUALA LUMPUR, March 14 — The strengthening of the US dollar has so far not affected the government’s revenue and expenditure although food prices, especially the import of seeds and fertilisers have suffered due to the weakness of the ringgit against the currency.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim said the ringgit remained positive against the British pound, Japanese yen, Australian dollar, Chinese yuan and Indonesian rupiah.
“Fortunately our exposure to debt based on US dollar is much lower than before and as I mentioned, this US dollar payment includes the debt of 1Malaysia Development Bhd (1MDB),” he said during the Minister’s Question Time in Parliament on Tuesday.
Earlier, Datuk Ahmad Amzad Mohamed @ Hashim (PN-Kuala Terengganu) had asked the government to state the country’s fiscal strength due to the weakening of the ringgit and solutions to balance the situation.
Anwar said the strengthening of the US dollar against the ringgit was driven by the increase in interest rates in the world’s largest economy compared to Bank Negara Malaysia’s (BNM) Overnight Policy Rate (OPR) which is currently at 2.75 per cent.
Responding to Ahmad Amzad’s additional question about Malaysia’s steps in dealing with the increase in interest rates in the United States, the Prime Minister said he was confident that BNM would take the best steps to deal with this matter
“I think BNM had taken into account all these factors which is why in the last meeting last week it decided to maintain the interest rate so as to be able to maintain the strength of the ringgit and inflation in our country.
“I believe BNM in evaluating this matter also takes into account inflation which has not increased at the moment and therefore we can still hold out apart from our inability to control developments in the United States,” he said.
He said the national inflation is still based on the 3.3 per cent forecast for 2022 and is expected to remain at that rate for 2023, if not reduced.
Earlier Dr Mohammed Taufiq Johari (PH-Sungai Petani) raised the question about the government’s measures to reduce the (fiscal) deficit to 3.2 per cent by 2025, Anwar said the projected deficit for 2023 and future years is ‘reasonable’ looking at the results achieved.
Anwar said that besides the reduction in expenditure related to the COVID-19 pandemic, the revenue from the settlement from International Petroleum Investment Company (IPIC) is worth US$1.8 billion and the absence of 1MDB debt payments for next year.
“For this year, we haven’t spent anything yet for COVID-19.
“Another thing to be considered for 2023 is the 1MDB money that has to be paid this year of around RM13.5 billion but this is a one-off. Next year this amount is not included in the estimate,” he said.
