Total national debt is RM879.6 billion, says Zafrul

 

The finance minister, Tengku Zafrul Aziz, responded to criticism about the figures on the national debt. (Bernama pic)

KUALA LUMPUR: Finance minister Tengku Zafrul Aziz, answering critics who questioned the basis of the government’s national debt figures, said today that the total debt including offshore and other borrowings amounts to RM879.6 billion or 62% of the gross domestic product.

He said that the national debt figure of RM820.7 billion or 58% of the GDP for end-2020 represented the statutory debt under current law. The figure is projected to increase to 58.5% of the GDP in 2021.

“There have been many questions on Malaysia’s government debt lately, including how it is defined, how it has increased and whether the current statutory debt limit should be revised given the various stimulus packages launched in the past one year,” he said in a statement quoted by Bernama.

Among those who have questioned Malaysia’s national debt figures was former prime minister Najib Razak, who quoted FMT’s report today about an economist calling for clarity about the figures and projecting a total debt of RM975 billion for 2021.

Zafrul said the government had always been consistent in explaining the statutory debt, whether in Parliament or to the media, and such transparency is also reflected in the annual Fiscal Outlook report.

“The federal government debt consists of all types of debt, both domestic and external,” he said.

Statutory debt was always referred to as comprising Malaysian government securities, Malaysian government investment issues and Malaysian Islamic treasury bills.

When the finance ministry reported the statutory debt for end-2020 of RM820.7 billion or 58% of the GDP, the figure was based on the legal definition provided for in the Covid-19 financial measures act.

Should the offshore and other borrowings be included, the federal government debt would total RM879.6 billion or 62% of the GDP.

He said the government continued to adhere to the limits of each type of debt under the respective governing statute to ensure fiscal discipline. Zafrul said that all these figures have been clarified with, and accepted by international ratings agencies and analysts.

“Prior to Covid-19, the cap of 55% of GDP was a government self-imposed limit applied to both domestic and external debts. However, when Covid-19 struck, the country needed more fiscal flexibility to save lives and livelihoods,” he said.

The limit was increased under the Covid-19 Temporary Measures Act to 60% of the GDP for MGS, MGII and MITB, he said.

The higher debt ceiling allowed the government a buffer, particularly in directing additional aid to the people who are worst affected, he said. - FMT