Growing mountain of debt

THE country’s debt level could hit the statutory limit of 55% of gross domestic product (GDP) at the end of the year from 52% currently, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said on Tuesday.

The government, since March, has announced a total of Rm295bil worth of economic stimulus that includes a direct fiscal injection of Rm45bil to combat the impact of the coronavirus disease (Covid19) pandemic.

The additional spending is also expected to widen the country’s budget deficit this year closer to 6% from the pre-pandemic projection of 3.4%.

To put things into perspective, Malaysia’s GDP stood at RM1.5 trillion as at the end of 2019.

The government’s total liabilities, meanwhile, had risen to Rm824bil as of the first quarter of the year, official figures showed.

The debt pile excludes the government’s pension liabilities, state debts, an estimated Rm200bil worth of government guarantees and lease payments under the public-private partnership programme.

Based on the country’s population of 33 million people as of the first quarter of this year, the federal government debt burden amounted to about RM25,000 per Malaysian.

The statutory limit of 55% of GDP on government debt is seen as a “self-imposed” cap that can be raised through Parliament if deemed necessary for the people’s well-being.

This was said by Malaysian Industrial Development Finance group managing director Datuk Charon Wardini Mokhzani on Wednesday.