PETALING JAYA: The World Bank Group’s present definition of government’s debts that only includes direct debts borrowings is inadequate, Finance Minister Lim Guan Eng says.
In a statement issued on Wednesday, he said government guarantees or liabilities that have been committed or crystalised due to default by the principal borrowers, are not covered.
“This does not give a correct or accurate picture of the government actual debt position.
“In fact, this loophole permits manipulation by limiting direct debt and pushing everything else to government guarantees or liabilities to hide the actual heightened or worsening government debt position, ” he said in a speech on Oct 19.
He was delivering his speech as chairperson of the Constituency of Brunei, Fiji, Indonesia, Laos, Malaysia, Myanmar, Nepal, Singapore, Thailand, Tonga and Vietnam at the development committee ministerial meetings of the World Bank in Washington.
Lim also said the WBG must also establish debt transparency to build a foundation that promotes clarity, consistency and certainty, he said.
He urged the WBG to continue to expand its analytical works and policy recommendations for middle-income economies to facilitate their transition to developed high income status.
He also highlighted that heightened trade tensions, subdued investment and the breakdown of multilateralism aptly summarised the challenges for emerging market and developing economies (EMDEs), like the region, to maintain the growth momentum and safeguard its financial and macroeconomic stability.
“Despite the dampening economic outlook, our constituency’s long-term fundamentals remain intact, supported by robust domestic consumption, the growing middle class and rapid urbanisation.
“This year our region’s growth rate is projected to slowdown slightly, but we are still growing at a projected rate of 4.6%, higher than the projected global growth of 3%, ” it said.
Lim said whilst these countries face their own domestic fiscal challenges, their growth momentum is inhibited by protectionism which threatens the multilateral trading system, technological disruptions and climate change.
He said these regional countries agreed with the WBG’s approach to advocate multilateral cooperation to reduce trade dispute among member countries and realise the aspiration of building free, predictable and stable trade and investment environment.
“We also need to further intensify our international collaboration and cooperation through a multilateral framework, where digitalisation can be a freely available, accessible and affordable platform, ” he said.
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