Moody’s debt-assessment discredits government's RM1 tril debt figure, says Najib

-A +A

KUALA LUMPUR (June 13): Former prime minister Datuk Seri Najib Razak says the Pakatan Harapan government’s RM1 trillion debt figure was disproved, after Moody’s Investors Service maintained Malaysia’s debt ratio was at 50.8%.

In a Facebook and Twitter post today, Najib said the credit rating agency had independently assessed the government's debt claim, as well as its “self-declared” debt-to-gross domestic product (GDP) ratio of 80.3%,

“Moody's have found those claims to be untrue, and have maintained our debt ratio to be the 50.8% declared by the Barisan Nasional government previously,” he said. “You can mislead the people but you cannot mislead the experts."

“Knowing how important such figures are and the impact [this] has on the economy, we had always been transparent in our disclosures and had adhered to strict international standards of reporting,” Najib added.

The Pakatan government must have the integrity to adhere to international standards and keep politics out, when it comes to financial reporting, he said.

Moody’s, in a statement earlier today, said it is maintaining its estimate of Malaysia's direct government debt at 50.8% of GDP.

“[Our] assessment of contingent liability risks posed by non-financial sector public institutions has also not changed, following some statements by the new government,” the agency said.

However, 1Malaysia Development Bhd’s (1MDB) outstanding debt will play an important role in determining the risks contingent liabilities pose to Putrajaya’s credit profile, it added.

The contingent liabilities' risks will also hinge on the government’s treatment of large infrastructure projects that may be placed under review, but have benefited from government-guaranteed loans in the past, Moody’s said.

Even if the government’s 80.3% debt ratio was accepted, it is still lower than the 103.4% reached in the mid-1980s during Tun Dr Mahathir Mohamad’s first tenure as prime minister, Najib said.

“Malaysia did not go bankrupt then, so there is no logic that Malaysia will be bankrupt at 50.8% or even at 80.3% — especially since 97% of our government debt is denominated in ringgit,” he said.

The former premier claims the RM1 trillion debt statement had contributed to the large foreign funds outflow from the country’s bond markets and to the 25 consecutive days of net foreign selling of the share market.

He thinks the situation can only cause losses to retail investors, as well as the savings and dividends, and to funds such as the Employees Provident Fund, Tabung Haji and Amanah Saham Nasional.