Malaysia's financial situation still strong, says Zafrul

Finance Minister Tengku Zafrul Aziz today said that the country's fiscal position remains strong and that the government's debt is still under control. 

He said the government remained highly disciplined and had never failed to pay the interest and mature debts despite having gone through a series of economic and financial recession crises.

"This proves Malaysia's reputation and ability as a debtor with a good repayment record," he said in a statement today.

He said this in reference to several reports on social media which he said were aimed at confusing the people about the country’s financial position and debt situation.

Tengku Zafrul said prudent debt management was also implemented through existing laws, including Article 98(1)(b) of the Federal Constitution which stipulates that the government should always prioritise debt charges over other operating expenses.

He said the External Loans Act 1963 provided for offshore borrowings not exceeding RM35 billion and the Interim Measures for Government Financing (Coronavirus Disease 2019 (Covid-19)) (Amendment) Act 2021 stipulated that the statutory limit of government debt should not be more than 65% of the GDP.

As of end-June, offshore loans amounted to RM29.4 billion while statutory debt accounted for 60.4% of GDP, he said.

He added that 97% of the total federal government debt was in ringgit denomination, thus reflecting prudent debt management with minimal exposure to foreign exchange risk.

"A high level of debt does not mean that the country is at risk of bankruptcy," he added.

"Various international rating agencies such as S&P Global, Fitch and Moody’s constantly assess a country’s debt levels along with other factors such as a prudent fiscal framework, sound governance and good external position as well as economic strength."

Tengku Zafrul said the International Monetary Fund had also acknowledged that Malaysia’s debt position was still at a manageable level.

Recently, S&P forecast that government policy planning would support the strengthening of the country’s fiscal position, he said.

He said the finance ministry also denied allegations by some that Malaysia would go bankrupt like a certain country in South Asia.

"The finance ministry has lodged a formal complaint with the Malaysian Communications and Multimedia Commission on several false reports on social media about the country’s debt position which apparently are aimed at misleading the people and potentially undermining investor confidence in Malaysia," he added.