Malaysia needs more fiscal space to manoeuver and safeguard growth under current challenging economic condition. The current persistent deficit and high leverage has raised concerns about the sustainability of Malaysia's fiscal position. Amid the above concerns, measures that have been taken by the Government thus far; mainly in the form of subsidy rationalization and the introduction of the Goods and Services Tax (GST); although required, have not been popular among the masses, and ineffective if the Government does not reign in its operating expenditure and borrowing. Increasing borrowing further via bond issuance or long-term government borrowing increases vulnerability, adds interest payment burden on future taxpayers and creates adverse distributional implications.
