KUALA LUMPUR (Reuters) - Malaysia aims to borrow its way out of an economic slump brought on by the coronavirus pandemic, and the finance minister told Reuters it will nearly double its fiscal deficit this year while keeping open the option of raising the public debt ceiling.

Southeast Asia’s third-biggest economy has announced incentives worth 295 billion ringgit ($69 billion) to soften the impact of the coronavirus pandemic, with the government vowing to directly inject 45 billion ringgit of that into the economy, mostly raised through domestic borrowings.

Finance Minister Tengku Zafrul Aziz told Reuters the fiscal deficit would rise to around 6% of annual economic output this year because of the stimulus, and that a direct fiscal injection of 10 billion ringgit announced on Friday would be raised through domestic borrowing.

“There is only so much monetary policy can do,” Tengku Zafrul said in an interview in his office. “So you need fiscal policy to come into play, as long as you have the discipline and the commitment in the longer term to go back to where you should be in terms of the deficit.”

Tengku Zafrul, who was chief executive of lender CIMB Group Holdings Bhd (CIMB.KL) before joining the three-month-old government, said the goal was to narrow the fiscal deficit back down to less than 4% of gross domestic product (GDP) over the next three years or so. It was 3.2% last year.

“How bad was it during the (global financial crisis)? It was 6.7%. So we have room if we want to borrow,” he said, referring to the country’s peak annual deficit in 2009.

The region’s largest economy, Indonesia, said last month that it expected its budget deficit to swell to 6.27% due to virus-related stimulus.

Tengku Zafrul said Malaysia’s outstanding public debt now stands at 52% of GDP but that “if we need to, then we should increase the ceiling” beyond the current 55% “to help the people and the economy”.

He declined to say how high the government might seek to raise the ceiling, a move that would require approval from parliament.

Neighbouring Thailand said in April its latest borrowing plans would increase its public debt to 51.84% of GDP in the current fiscal year and 57.96% in the next one.

Tengku Zafrul, 46, said there was no immediate need for the central bank to cut its benchmark interest rate further from its decade low of 2%, “given the liquidity in the country and given where the currency is going and where we are we as an economy”.

Bank Negara Malaysia’s monetary policy committee next meets on July 7, and some analysts have predicted another cut.