‘UNSCRUPULOUS’ NAJIB CAUGHT TRYING TO DUPE MALAYSIANS AGAIN: NATIONAL DEBT ALREADY CROSSED RM1 TRILLION MARK, TO DOUBLE TO RM2 TRILLION BY 2028 IF HE CONTINUES BORROWING TO PAY OFF 1MDB LOANS

MALAYSIA’S debts have crossed the RM1 trillion mark if Putrajaya-backed loans are taken into account, said economists.

They were responding to Prime Minister Najib Razak’s statement recently that Malaysia’s debt would shoot up to RM1.1 trillion if Pakatan Harapan abolished the goods and services tax and existing tolls.

Najib said PH’s promises would plunge Malaysia into a further RM416 million debt on top of the current RM685 billion debt, taking the total amount of debts to more than RM1 trillion.

Former World Bank economist Dr Lim Teck Ghee, however, said it is an election “shock and awe” tactic as the federal government debt is close to RM700 billion as at September 2017.

“And this does not include government-guaranteed debt, including the ones from 1Malaysia Development Bhd, which is more than RM200 million,” Lim told The Malaysian Insight.

“In fact, if the federal government debt under BN continues to grow at the same rate as it has during the past decade, it will reach more than RM1 trillion by 2021; RM2 trillion by 2028 and RM3 trillion by 2032, according to reliable estimates,” said the Centre for Policy Initiatives CEO.

Lim said while the prime minister and BN leaders have a right to ask what happens to the country’s finances when the GST and other important sources of revenue are abolished by Pakatan, he should direct the comments “at his own leadership and government”.

“As to the debt that the younger generation will inherit as a result of government excesses, leakages and mismanagement, many will feel that his warning should be directed at his own leadership and government.  

“People in glass houses should not throw stones,” said the former Universiti Sains Malaysia and Universiti Malaya professor.

Without factoring the government guaranteed loans, the federal government’s debt has grown an average of over 10% a year from RM266.7 billion in 2007 to RM671.5 billion in 2017.

Independent economist and finance consultant Azrul Azwar Ahmad Tajudin said the federal government debt is already close to 70% of GDP. Malaysia has a self-imposed 55% limit on federal government debts.

“If we add up the figures as at the end of third quarter 2017, the federal government debt and government-guaranteed debts, which are off-balance sheet obligations of RM687.430 billion and RM226.876 billion respectively, the tally would amount to RM914.306 billion, not that far from the RM1 trillion mark. That would be equivalent to a touch above 70% of the GDP,” said Azwar.

On whether the debt would exceed the RM1 trillion mark after the abolishment of GST and tolls by PH, the former economist to the Selangor government said it was only a “hypothetical debt” by Ministry of Finance’s secretary-general Irwan Serigar Abdullah.

“It is according to a method of evaluation only known to him which I would assume is the total value without taking into account offsets and other mechanisms to keep the price tag low.”  

He said many have jumbled up the potential revenue losses annually from PH’s proposed GST abolition (RM45 billion) and excise duty abolitio

.n (RM2.4 billion) with the overall amount of bonds that the federal government would have to issue to take over all toll operators (RM338 billion according to the MOF’s evaluation).

“As such, according to the MOF secretary-general’s estimates, the annual potential revenue losses could amount to RM51.3 billion and total public debt could increase by RM338 billion while no estimate for potential expenditure was given,” said Azwar.

The Edge business weekly recently reported that off-budget spending is estimated to be at least RM221 billion or 16.9% of GDP.

– https://www.themalaysianinsight.com