‘GDP growth under Najib exceeds that of Dr M’
KUALA LUMPUR: Malaysia’s gross domestic product (GDP) growth during Datuk Seri Najib Razak’s eight years as prime minister is equivalent to two of Tun Dr Mahathir Mohamad’s 22-year stint as leader, Barisan Nasional strategic communications deputy director Eric See-To said yesterday.
He said Dr Mahathir’s leadership saw Malaysia’s debt-to-GDP ratio rising to above 100 per cent in the first six years of his tenure, and questioned how the opposition concluded that the country was going bankrupt when the ratio was at 50.9 per cent.
He said when Najib took over in 2009, the nominal GDP stood at RM705.4 billion and was on track to hit RM1.3 trillion, which was RM605 billion more than at the beginning of his tenure as prime minister.
“For comparison, the total GDP in 2003, when Dr Mahathir resigned as prime minister, was RM371.7 billion.
“In other words, (in) the past eight years under Najib, the nominal growth of our economy is almost equivalent to the size of two Mahathir-era Malaysia.”
He said the opposition ignored such facts, choosing to mislead people into believing that the country was going bankrupt and that Najib had been mismanaging the economy.
“Debt must be seen in the context of our income, our assets and our ability to repay, and not just on absolute amount. For example, imagine a person whose income per year is RM10,000, but has a car loan debt of RM13,000. Imagine another person whose income is RM130,000 per year, but his car debt is RM65,000. Who is in more danger?
“Of course, the person whose income is RM10,000 per year, as his debt of RM13,000 is higher than his annual income.
“Similarly, for a country, the country’s income must be used to compare if our debt is at a safe level.”
He said in such instances, economists used the debt-to-GDP ratio. At Malaysia’s level of RM687 billion, the ratio was at 50.9 per cent as at the end of Q3 2017. “This is considered a safe ratio. “There are 91 countries with a higher ratio than us, including developed nations. We are not in any danger of default. This is why all the credit rating agencies give Malaysia an A grade investment rating.”
He said Malaysia did not owe any money to the International Monetary Fund and World Bank.
“While it is true that when Najib became prime minister in 2009 our debt-to-GDP ratio jumped almost 11 per cent from the 40 per cent level, this was due to the recession that impacted the world. That was the worst recession since the 1930s.
“Malaysia was also affected and the government had to borrow a big amount to pump into the economy via two stimulus packages that year. The measures worked, and Malaysia’s economy was stabilised and saved.”
He said since then, Malaysia had been registering positive growth.
“As most Malaysians have forgotten this, Najib ended up being blamed for increasing our debt even though it was meant to save Malaysia from the worst global recession in 80 years.
“Since then, as our economy continues to grow at a good pace, the debt-to-GDP ratio has continued to drop. It was as high as 54.7 per cent in 2015, but has dropped to 50.9 per cent and is expected to decline further.
“Compare this with our previous prime minister, who, within the first six years of becoming prime minister, had more than doubled our debt-to-GDP ratio from 44 per cent in 1980 to 103.4 per cent in 1986 due to projects such as Perwaja Steel.
“If we did not go bankrupt at a debt-to-GDP ratio of more than 100 per cent then, how is Malaysia supposed to go bankrupt at 50.9 per cent?”