March 27, 2020 / 7:48 AM / 4 months ago

Malaysia announces $58-billion stimulus package to cushion impact of coronavirus

KUALA LUMPUR (Reuters) - Malaysia announced a stimulus package worth 250 billion ringgit ($58.28 billion) on Friday, its second in a month, to help cushion the economic blow from the coronavirus pandemic.

Police officers stand guard at an entrance of a market, during the movement control order due to the outbreak of the coronavirus disease (COVID-19), in Kuala Lumpur, Malaysia March 27, 2020. REUTERS/Lim Huey Teng

The number of confirmed infections in Malaysia has doubled this week to over 2,000, the highest in Southeast Asia, with 23 deaths. The government has extended curbs on travel and movement until April 14 in an attempt to contain its spread.

The new package includes a 25 billion ringgit direct fiscal injection by the government aimed at helping families and business owners weather the economic downturn caused by the coronavirus outbreak.

“We are a nation at war with invisible forces. The situation we are now facing is unprecedented in history,” Prime Minister Muhyiddin Yassin said in a televised address.

“This unprecedented situation, of course, requires unprecedented measures.”

He said the stimulus package was mostly “one-off” measures and was designed to make sure the government’s finances remained sound over the medium term.

“The government will ensure that the fiscal current account is in surplus and does not use borrowings to fund operational expenditure,” he said, adding that fiscal consolidation measures would be needed in the medium term “to create fiscal space for the long term.”

The new package largely includes one-off payments and discounts on utilities for people whose livelihoods have been affected by the pandemic, and to help small and medium-sized enterprises stay afloat and retain their staff.

To ensure food security, the government has set aside 1 billion ringgit for a food security fund on top of continued aid to the agriculture sector to boost food production.

The government will also set up a 50 billion ringgit loan scheme for larger companies, which will offer guarantees of up to 80% of the sum borrowed to shore up working capital in the corporate sector.

About 128 billion ringgit will be spent on public welfare measures, with 100 billion used to support businesses.

The package is in addition to a 20 billion ringgit stimulus plan announced last month.

Muhyiddin said the government will also proceed with major projects included under the 2020 Budget, including the multi-billion dollar east coast rail line (ECRL), and 2 billion ringgit in infrastructure micro-projects scheduled to begin in April.

Reporting by Joseph Sipalan; Editing by Kim Coghill & Simon Cameron-Moore

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