In a statement today, finance minister Tengku Zafrul Aziz stressed that the financial situation in the country remains stable and the debt level is under control.
“The government has never failed to service its loans and interest obligations. This means that as a borrower, Malaysia has a clean record (in servicing its loans),” he added in response to comments on social media with regards to Malaysia’s debt situation.
He said these comments were designed to confuse the people.
Tengku Zafrul stressed that the government had been disciplined in meeting all interest obligations and debts upon maturity despite a “series of economic downturns”.
He said prudent debt management, reinforced by requirements under the law, had kept the nation’s borrowings well within the statutory limits.
Under the law the government must ensure that expenses related to debt charges, over other operational expenses, cannot exceed RM35 billion, he said.
As at end June 2022, the debt amounted to RM29.4 billion, Tengku Zafrul revealed.
According to the Temporary Measures for Government Financing [Coronavirus Disease 2019 (Covid-19)] (Amendment) Act 2021, the government’s statutory debts cannot exceed 65% of the gross domestic product (GDP).
As at end June 2022, statutory debts amounted to 60.4% of GDP, while 87% of the government’s debts are in ringgit denomination, thereby reducing risks to foreign exchange fluctuation.
This, Tengku Zafrul said, was a reflection of prudent debt management.
“A high debt level does not translate into high bankruptcy risks for the country. Various international rating agencies, such as S&P Global, Fitch and Moody’s, rate a nation’s debt level alongside other factors such as the fiscal framework, strong governance, sound foreign affairs policies and a strong economy.”
He also said the International Monetary Fund had acknowledged that the national debt is at a “manageable level”.
“The finance ministry wishes to refute claims by irresponsible parties with ill intent that Malaysia is bound for bankruptcy, like a South Asian nation recently,” he stressed.
The ministry also stated that it has lodged an official complaint with the Malaysian Communications and Multimedia Commission for the false and misleading reports on the nation’s debts, which it said could erode investor confidence.
We are live on Telegram, subscribe here for breaking news and the latest announcements.