LAST week, Prime Minister Tun Dr Mahathir Mohamad disclosed that Malaysia’s debt has reached more than one trillion ringgit. The next day, Finance Minister Lim Guan Eng elaborated that the debt to GDP ratio stood at 80%. But he also stressed that “in the financial sector, capitalisation is high, non-performing loans are low, liquidity in the capital market is high. The fundamentals are there but we need to improve the fiscal situation.”
One should add that Malaysia has also accumulated foreign reserves to the tune of US$110bil which can finance 7.7 months of retained imports.