Malaysia’s Debt – Deconstructed
MALAYSIAN FINANCE BLOGSPOT
Nobody is spooking anyone by revealing the level of debt the country is facing. Before we can properly address the debt, we have to be honest and come clean. No point pussyfooting here. Some said that that jolted the markets. While the stock market is an important aspect for a open trading country like Malaysia, volatility in the market cannot be minimised at the expense of the greater good. I believe most Malaysians would not mind suffering over the short term as long as the good of the country is being prioritised.
There are rules in placed where federal government’s debt-to-GDP ratio should be lower than the 55% self-imposed debt limit. If the previous government deliberately misled or went over that limit, as it appears to be so, there should be “censures” and a deliberation on possible legal consequences for the mismanagement and misinformation.
(not trying to trivialise the matter, but have a look at our current standing among the rest of the world, while I balked at 80% of GDP figure, it is nowhere near critical or unmanageable)
Finance Minister Lim Guan Eng put the ratio at 80.3% of GDP, or about RM1.09 trillion in debt as at end-2017. There are just too much off balance sheet items. Not all of the debt is bad. The majority based on viable and economically beneficial projects. Nonetheless, you don’t want to be servicing RM70b a year in interest year in year out (assuming an estimate of 6%p.a.).
