Call for rightsizing to cut debt level

KUALA LUMPUR: There is an urgent need to rightsize the public sector as rapidly expanding operating expenditure continues to suppress development expenditure, causing a rise in debt level and debt servicing cost, said economists.

Sunway University Business School economics professor Dr Yeah Kim Leng said there was a rise in government operating expenditure related to the expanding size of the civil service.

“I think we have to match the increased salary with productivity for the civil service and, at the same time, increase their productivity so the government does not need to expand the size of the civil service,” he said on the sidelines of a panel discussion on the Malaysian economy, here, yesterday.

RHB Research Institute chief economist Lim Chee Sing said based on the budget this year, the government projected that 97.8 per cent of revenue would still be used for operating expenditure.

He said with a small portion disbursed for development expenditure, the country needed to increase its borrowings, which would increase its debt level and debt servicing cost.

Meanwhile, Bank Negara deputy governor Shaik Abdul Rasheed Abdul Ghaffour said macroeconomic fundamentals remained supportive of growth with diversified sources of growth, export markets, stable labour market conditions, current account surplus and strong financial buffers. Farah Adilla