Towards a Sustainable Fiscal Position for Malaysia by Azura Othman

Author:Azura Othman
Language: eng
Format: epub
Publisher: De Gruyter
Published: 2021-09-16T11:13:14.423000+00:00

4.4.2

Simulation of Government Expenditure Based on the Risk Sharing Financing Model

The fiscal reform being proposed includes a public sector financing structure that is free from interest-based instruments. Equity participation shares (EPS) will replace government debt in financing Malaysia’s fiscal deficit and development expenditure. Under the current structure, national debt is the accumulation of financing of fiscal deficit. The proposed structure will see the deficit being financed by the government issuing EPS instead of interest-bearing bonds and the EPS will be backed by the government development project. This book proposes to model the public financing reform as follows:

The government’s development expenditure will be fully financed by the equity participation shares (EPS). EPS is an equity-based paper issued to the private sector, in small enough denominations so that the general public will be able to purchase it as an investment, thereby allowing the public to participate in the development of the nation.

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