National debt: Najib sees new Moody's estimate as vindication

Former prime minister Najib Abdul Razak today suggested that Moody's Investor Service's estimate that Malaysia's debt-to-GDP ratio stood at 50.8 percent proves that the Pakatan Harapan administration had misled the public.

"The top international credit rating agency, Moody's, have independently assessed the Harapan government's claims of RM1 trillion debt and a self-declared debt-to-GDP ratio of 80.3 percent.

"Moody's have found those claims to be untrue, and have maintained our debt ratio to be the 50.8 percent declared by the BN government previously.

"You can mislead the people but you cannot mislead the experts," Najib wrote on Facebook today, shortly after Moody's latest report on Malaysia was posted.

The rating agency had maintained that "direct government debt" stood at 50.8 percent of GDP in 2017.

"(The) assessment of contingent liability risks posed by nonfinancial sector public institutions has also not changed following some statements by the new government," said the rating agency.

The Harapan administration had estimated that the real ratio was 80.3 percent, higher than the legal 55 percent ceiling, because its calculation included "hidden debts" such as GLC debt repayments guaranteed by the federal government and lease payments.

In all, Finance Minister Lim Guan Eng said the actual national debt was RM1,087.3 billion.

In the same Facebook post, Najib, who was also finance minister from 2009 until the recent polls, said his administration had "always" been transparent in their disclosures, and adhered to strict international standards of reporting.

However, his response did not contain a reaction to another important note in the Moody's report – that the new government's treatment of government-guaranteed loans for large infrastructure projects and 1MDB "will play an important role in determining risks that contingent liabilities pose to the credit profile."

Meanwhile, Najib said even if Harapan was claiming that the ratio was 80.3 percent, it was still lower than the 103.4 percent reached in mid-1980s, when Dr Mahathir Mohamad was serving his first tenure as prime minister.

"Malaysia did not go bankrupt then, so there is no logic that Malaysia will be bankrupt at 50.8 percent or even at 80.3 percent – especially since 97 percent of our government debt is denominated in ringgit," he said. - Mkini