‘DEBT-TO-GDP RATIO WILL NOT EXCEED 60PC LIMIT’
The need to spend will be greater in an economic crisis, says Tengku Zafrul
THE government’s debtto-gross domestic product (GDP) ratio is likely to reach 58.5 per cent by year end and not exceed the statutory limit of 60 per cent, said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.
He said the collective amount for government-issued instruments from Malaysian Government Securities, Malaysian Government Investment Issues and Malaysian Islamic Treasury Bills stood at 58 per cent of GDP as at end-December.
“Limits for these types of debts are stipulated in specific Acts and have been applied since 2009, and not my own personal interpretation. Simply stated, the definition of statutory debt has not changed since 2009.
“Government debt is still below the statutory limit as stipulated by law. As at end-February, the government’s total debt was 54 per cent of GDP,” Tengku Zafrul said in the 46th edition of the Laksana report yesterday.
He said other debt instruments have had their own statutory limits and are still below the limits, such as RM35 billion for external debt and RM10 billion for Malaysia Treasury Bills.
Tengku Zafrul said with the country in an economic crisis, the need to spend for the rakyat would be greater, naturally increasing the level of debt.
“As a result, the government has injected a total of RM340 billion into the economy through a series of stimulus packages. Although it has increased our debt, the total still does not exceed the statutory limit,” he said.
The Finance Ministry would continue to monitor the country’s debt to ensure it is under control.
Tengku Zafrul said there are good debt and bad debt, adding that the former is a loan that the government has taken to finance initiatives to help people and save jobs.
He said bad debt, such as legacy debt, does not bring any economic benefit to the people.
Tengku Zafrul said the government would still need to manage the legacy debt although it is not incurred by the current government.