Malaysia’s economy is still manageable despite closing in on the self-imposed Debt to Gross Domestic Product (GDP) ratio of 55 per cent.
This assurance comes from Minister in the Prime Minister’s Department Abdul Rahman Dahlan, who is in charge of the Economic Planning Unit.
In a Facebook post today, Rahman said claims have been made that the current government debt which, as at June 30, stood at 53.4 per cent, may see Malaysia getting closer to a troubled economy and perhaps, bankruptcy.
He, however, explained that the country’s economic growth had increased tremendously, “about 17 times the size of our economy in 1986 and about three times the size of our economy in 2003.”
According to Rahman, this level, compared with that recorded between 1980 and 1985, showed that the country’s economy was still stable. He added that even if it hit more than 55 per cent, the economy would not collapse.
“Our debt-to-GDP ratio increased from 44.0 per cent to 103.4 per cent and stayed above the 55 per cent level until the year 1994.
“Therefore, it is illogical that even if Malaysia breaches the 55 per cent debt-to-GDP level then Malaysia would be ‘bankrupt’ or our economy will be in trouble as alleged by certain quarters (sic).
“If we did not go bankrupt at 103.4 per cent in 1985, then how are we going to be bankrupt at 55 per cent? Our debt levels must be looked at in relation to our income and not just based on absolute amounts.”
He said, of 179 countries, Malaysia was ranked 71st with the highest debt-to-GDP ratio while other developed countries such as Japan, the USA, United Kingdom and Singapore recorded higher ratios.
“As I have stated, our current debt-to-GDP ratio is manageable and our economy is still enjoying decent economic growth of 5 per cent for the year 2015 and 4.1 per cent for the 1st half of 2016 (sic).
“Despite the current low commodity prices, the effects of Brexit (The UK’s withdrawal from the European Union) and the overall uncertain global economic conditions, our government has no intention to breach this 55 per cent limit and will continue to manage our finances responsibly.”
He advised the public as well as “certain political parties” to avoid spreading false information or engage in scare tactics which he said would only end up damaging both investor and consumer confidence in the country’s economy.
“By all accounts, our government’s transformation plan is proving successful with good policies that are now showing strong results.
“All Malaysians should focus on such successes, as we navigate the uncertain global conditions at the moment.”
FMT Reporters Online