At RM437 billion, the nation is fast approaching its debt ceiling of 55 percent of gross domestic product, said Opposition Leader Anwar Ibrahim.
In a statement today, Anwar said that at that rate, the country’s debt-to-GDP ratio stands at 51 percent, leaving it not much room to even pay for the commitments made in Budget 2012.
“(Keeping within the 55 percent of GDP limit) allows for approximately RM33 billion additional debt to be raised by the government.
“This is clearly not adequate to finance the remainder of 2011 expenditure and the RM46 billion deficit to be funded through additional debts announced in BN’s Budget 2012,” the PKR de facto leader said.
According to Anwar, the 55 percent debt ceiling is explicitly mentioned in parliamentary Acts, including Act 637 Loan (Local) Act 1959 (revised 2004) and Act 275 Government Investment Act 1983.
In addition, he said, the Act 403 External Loans Act 1963 (revised 1989) also limits external loans to RM35 billion at any one time.
This, he said, means that any move to go expand loan exposure could also bring about legal ramifications for the Najib Abdul Razak administration.
A Bank Negara report, updated Oct 14, shows that as of June 30, the national debt stands at RM421 billion local debt and RM16 billion foreign debt.
Strict guidelines
Beyond the debt ceiling, the former finance minister said that national treasury also follows “strict guidelines” to strengthen fiscal discipline.
“For example, the proposed operational budget for a particular year should never exceed the revenue projection.
“Likewise, loans raised by the government should strictly be used for development budget,” he said.
Commenting further on the Budget 2012, tabled to parliament on Oct 7, Anwar said the projection of 5 to 6 percent growth is also “unrealistic” and will likely push the administration to rely on debt to fund the Budget commitments.
“Therefore a policy debate on the economy has become an urgent necessity against this backdrop of unconvincing economic data and a series of one-off election payments to a handful of electoral groups that will not improve the state of the economy,” he said.
The Pakatan Rakyat shadow budget predicts 4 to 4.5 percent growth in 2012, in light of the uncertain international economic climate.
Investment banks and research houses have trimmed their expectations, with Maybank Investment predicting that growth could be as low as 3.5 percent, and CIMB Investment predicting 3.8 percent.
In a statement today, Anwar said that at that rate, the country’s debt-to-GDP ratio stands at 51 percent, leaving it not much room to even pay for the commitments made in Budget 2012.
“(Keeping within the 55 percent of GDP limit) allows for approximately RM33 billion additional debt to be raised by the government.
“This is clearly not adequate to finance the remainder of 2011 expenditure and the RM46 billion deficit to be funded through additional debts announced in BN’s Budget 2012,” the PKR de facto leader said.
According to Anwar, the 55 percent debt ceiling is explicitly mentioned in parliamentary Acts, including Act 637 Loan (Local) Act 1959 (revised 2004) and Act 275 Government Investment Act 1983.
In addition, he said, the Act 403 External Loans Act 1963 (revised 1989) also limits external loans to RM35 billion at any one time.
This, he said, means that any move to go expand loan exposure could also bring about legal ramifications for the Najib Abdul Razak administration.
A Bank Negara report, updated Oct 14, shows that as of June 30, the national debt stands at RM421 billion local debt and RM16 billion foreign debt.
Strict guidelines
Beyond the debt ceiling, the former finance minister said that national treasury also follows “strict guidelines” to strengthen fiscal discipline.
“For example, the proposed operational budget for a particular year should never exceed the revenue projection.
“Likewise, loans raised by the government should strictly be used for development budget,” he said.
Commenting further on the Budget 2012, tabled to parliament on Oct 7, Anwar said the projection of 5 to 6 percent growth is also “unrealistic” and will likely push the administration to rely on debt to fund the Budget commitments.
“Therefore a policy debate on the economy has become an urgent necessity against this backdrop of unconvincing economic data and a series of one-off election payments to a handful of electoral groups that will not improve the state of the economy,” he said.
The Pakatan Rakyat shadow budget predicts 4 to 4.5 percent growth in 2012, in light of the uncertain international economic climate.
Investment banks and research houses have trimmed their expectations, with Maybank Investment predicting that growth could be as low as 3.5 percent, and CIMB Investment predicting 3.8 percent.
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