Friday 29 Mar 2024
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KUALA LUMPUR (July 14): Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz has rubbished claims being circulated on social media that Malaysia is about to become a bankrupt nation. He stressed that the federal government’s debt is under control, while the country’s fiscal position remains intact.

In a statement Thursday (July 14), Tengku Zafrul said that the government has been disciplined in servicing its debt and highlighted that Malaysia has never failed to pay its matured interest and debts.

"The Ministry of Finance (MoF) wishes to reject the claims made by several irresponsible parties with malicious intent that Malaysia is soon to become bankrupt, like a South Asian nation had recently. Besides that, the MoF has made a formal complaint to the Communications and Multimedia Commission Malaysia (MCMC) on several false reports circulating on social media about the national debt position, which aim to confuse people and have the potential of affecting investors’ confidence towards the country,” Tengku Zafrul said.

He added that 97% of the federal government’s debt is ringgit-denominated, and that this reflects Putrajaya’s prudent debt management as there is minimal exposure to foreign exchange risk.

Govt debt at 60.4% of GDP as at end June

Tengku Zafrul said the country’s prudent debt management is instilled via the country's laws, such as Article 98 (1) (b) of the Federal Constitution, which stipulates that the government always prioritises debt-related spending (debt charges) compared to other operating expenses.

At the same time, he said the External Borrowing Act 1963 provides that the country's offshore borrowings cannot exceed RM35 billion. As at end June, these borrowings totalled RM29.4 billion.

There is also the Provisional Measures for Government Financing Act (Coronavirus Disease 2019 (Covid-19)) (Amendment) 2021, which stipulates that the statutory limit of government debt shall not exceed 65% of its GDP, said Tengku Zafrul. As at end June, this debt stands at 60.4% of the country's GDP.

“High debt level does not mean the country is at risk of bankruptcy. Various international rating agencies such as S&P Global, Fitch, and Moody’s, constantly assess a country’s debt level along with other factors such as prudent fiscal framework and governance,” Tengku Zafrul said.

On that note, he pointed to how the International Monetary Fund (IMF) recently acknowledged that Malaysia’s debt position is still at a manageable level, while S&P forecasts that the government’s policies would help further strengthen Malaysia’s fiscal position.

Edited ByTan Choe Choe
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