PETALING JAYA: The country’s RM1.5 trillion national debt has no impact on economic performance, experts said.
According to a report by The Malaysian Insight, Universiti Tunku Abdul Rahman economist Wong Chin Yoong said the fact that the national debt was high was disclosed in 2018, but it had no impact on economic performance.
“Nothing new in this high national debt issue,” Wong told the portal.
He said even when the 1Malaysia Development Bhd (1MDB) financial scandal was blown wide open and there were widespread fears that it would trigger uncertainties over 1MDB-linked bonds, the market did not react.
Wong said as 97% of the national debt is in ringgit and they are medium- to long-term debts (more than 10 years), there is no possibility of it triggering a debt crisis.
Meanwhile, economic analyst Koong Lin Loong said the current national debt ceiling of 65% of Malaysia’s gross domestic product (GDP) is within acceptable parameters.
Malaysia’s debt limit, by law, was raised in August 2020 to 60% of its GDP.
In comparison, he said, Japan’s debt exceeds 100% of its GDP.
“There are other countries in a similar position and they have no problem at all. What is important is to improve the country’s economic performance for sustainable revenue,“ he reportedly said.
Earlier last month, Prime Minister Datuk Seri Anwar Ibrahim warned that this year’s fiscal position would not be comfortable, with about RM1.5 trillion in total debt and liabilities and a budget deficit setting around 5.8% of GDP as of last year.
He reportedly said “we cannot be content” with these figures and added that maximum debt service is approaching unmanageable levels.
