Malaysia's financial situation remains strong - Tengku Zafrul

  • Economy
  • Thursday, 14 Jul 2022

KUALA LUMPUR: The country’s fiscal position is still strong and the federal government’s debt is still under control, said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.

He said the government remains highly disciplined and has never failed to pay interest and mature debts despite having gone through a series of economic and financial recession crises.

"This proves Malaysia's reputation and ability as a debtor with a good repayment record,” he said in a statement today.

He said this in reference to several reports on social media which apparently were aimed at confusing the people about the country’s financial position and debt situation.

Tengku Zafrul said prudent debt management was also implemented through existing laws, among others, Article 98(1)(b) of the Federal Constitution which stipulates that the government should always prioritise debt charges over other operating expenses.

He said the External Loans Act 1963 provided for offshore borrowings not to exceed RM35 billion and the Interim Measures for Government Financing (Coronavirus Disease 2019 (COVID-19)) (Amendment) Act 2021 stipulated that the statutory limit of government debt could not be more than 65 per cent of Gross Domestic Product (GDP).

As at end-June 2022, offshore loans amounted to RM29.4 billion while statutory debt accounted for 60.4 per cent of GDP.

Meanwhile, the Finance Minister also explained that 97 per cent of the total federal government debt is in ringgit denomination, thus reflecting prudent debt management because exposure to foreign exchange risk is minimal.

"A high level of debt does not mean that 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 levels along with other factors such as a prudent fiscal framework, sound governance and good external position as well as economic strength,” he said.

Tengku Zafrul said the International Monetary Fund also acknowledged that Malaysia’s debt position is still at a manageable level.

Recently, S&P forecast that government policy planning would support the strengthening of the country’s fiscal position, he said.

Meanwhile, he said the Ministry of Finance (MoF) also denied allegations by some irresponsible and malicious parties that Malaysia would go bankrupt like a country in South Asia recently.

"The MoF has lodged a formal complaint with the Malaysian Communications and Multimedia Commission on several false reports on social media on the country’s debt position which apparently are aimed at misleading the people and potentially undermining investor confidence in Malaysia,” he added. - Bernama

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