Malaysia on way to high-income status despite debt concerns: World Bank

KUALA LUMPUR: The World Bank remains confident that Malaysia is on track to become a highincome nation, despite the RM1 trillion liabilities that the country is facing.

“Malaysia is a ‘success story’ … we see that Malaysia has a strong economy and it is moving toward highincome economy,” its country director Mara Warwick ( pix) told reporters after the launch of World Bank’s 18th edition of the Malaysia Economic Monitor yesterday.

“What we continue to emphasise in this report is really the importance of looking at the quality of growth, inclusiveness of this growth going forward and how every Malaysian can benefit from the economic success that the country has achieved,” she said.

The World Bank currently defines a high income economy as a one with a per capita gross national income (GNI) above US$12,235 (RM49.307).

Last year, Malaysia’s average GNI per capita was estimated at US$9,660, just US$2,575 from the defined threshold level.

The World Bank’s lead economist Richard Record said the national debt present only a limited risk to Malaysia’s economy when it comes to foreign exchange, as 97.7% of the country’s debt is denominated in ringgit.

He also noted that “there is a limited risk on rollover terms”, as almost 70% of the debt is on a medium-term horizon, with a maturity of more than three years.

However, Record said it is important for the new government to ensure that the debt is managed with transparency and vigilance, and in a prudent manner.

“We’ve encouraged the government to maintain the 2.8% fiscal deficit target this year,” he added.

Meanwhile, the World Bank said Malaysia’s nearterm growth and economic fundamentals remain sound, underpinned by stronger near-term outlook for household spending.

The stronger outlook primarily reflects the additional impetus from the new policy measures put forth by the government, including the temporary suspension of the consumption tax.

The World Bank expects the country’s economic growth to remain strong at a rate of 5.4% this year.