As the world enters a recession, Malaysia must be cautious about its debt and spending as the country is almost reaching its debt threshold, which is 65% of gross domestic product .
“Although Malaysia’s debt stands at RM1.5 trillion – RM1.2 trillion being national debt and the rest liabilities – the country’s revenue collection stands at RM270 billion while debt servicing is at RM45 billion annually, which is manageable for now. He said the country is facing a critical year as the government cannot hope to save a lot of money, and needs to ensure its debt does not exceed the threshold level .
The prime minister said on Tuesday that the national debt, including liabilities, has hit RM1.5 trillion and the debt-servicing charges for this year amounted to RM45 billion, representing 15% of national revenue.Sunway University economics professor Dr Yeah Kim Leng said the country’s current debt level is of concern, but it is not yet alarming, adding that the government needs to be fiscally prudent in managing the national debt.
“For emerging economies, a comfortable debt-to-GDP ratio should be in the 60% to 80% level before it starts hurting national development. Yeah said one way to achieve this is to cut down government wastage and leakage, as this would build investor confidence, adding that it is timely now for the new government to work on creative ways and conditions to reduce debt.
Source: Loan Digest (loandigest.net)
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