KUALA LUMPUR: The chances of Malaysia going bankrupt like Sri Lanka is extremely slim, says Tengku Datuk Seri Zafrul Tengku Abdul Aziz (pic).
"The International Monetary Fund (IMF) has never mentioned any economic problems faced by Malaysia that could result in the country going bankrupt but had instead expressed confidence in the nation's economic growth.
"In late April, the IMF said it was confident at the prospect of Malaysia's economy expanding by 5.75% this year.
"If you compare the economic indicators between Malaysia and Sri Lanka, ours is far much stronger than that of Sri Lanka.
"As such, the possibility of Malaysia going bankrupt like Sri Lanka is extremely slim," the Finance Minister said when responding to a supplementary question raised by Datuk Seri Ahmad Maslan (BN-Pontian) in Dewan Rakyat on Tuesday (July 19).
Ahmad asked the minister to clarify on recent viral claims on social media that Malaysia would end up bankrupt like Sri Lanka based on the national debt.
Tengku Zafrul assured the house that the government continues to be prudent and careful when managing the nation's finances and debts.
He also clarified that the nation's ability to borrow more money to help the rakyat is not based on the current amount of national debt.
"Although Malaysia’s debt is 63% of the national gross domestic product (GDP) compared to Japan which is at 263% and Singapore at 133%, the ability of a country to increase borrowings is not solely dependent on the debt ratio against the GDP but more importantly on its debt affordability and debt sustainability," he said.
Currently, he said that Malaysia's debt service ratio was at 16.3% and is expected to increase to over 18% this year.
"This means that for every ringgit obtained by the government as revenue, almost 20 sen will be used to service the debt interest which does not include the principal sum," he said.
He noted that this was much higher than the debt service ratio of countries such as US, UK and Japan.
Earlier, to a question by Wong Hon Wai (PH-Bukit Bendera), Tengku Zafrul denied claims that the government had reduced subsidies to benefit the rakyat.
He cited the example where the government is expected to fork out RM37.2bil in subsidy for petrol, diesel and liquefied petroleum gas (LPG) this year compared to only RM13.2bil last year.
He also said that the government is providing RM4bil in subsidy for cooking oil compared to RM2.2bil last year.
He noted that subsidies for other essential goods had increased to RM9.7bil compared to RM1.1bil.