Update: So with this in mind, the Malaysian
government wants to send a second ankasawan on a junket to space (which
would cost hundreds of millions of ringgit) – if funds permit. Well, do
you think the state of our funds will ‘permit’ this?
Malaysian government debt has been steadily rising in recent years and is expected to touch RM502bn this year or 53.7 percent of GDP on the back of a rapid rise in issues of quasi-government bonds and securities. (The legal threshhold is 55 percent.) But this does not include sizeable contingent liabilities or off-balance sheet items.
Click to enlarge the following general government gross debt data from the International Monetary Fund:
At the onset of East Asian economic crisis, general government gross debt compared to GDP had sunk to a a low of 32.3 percent, according to IMF figures. By 2000, it had risen to 35.3 percent and by 2008, it had touched 41.2 percent. And now it is has soared to over 53 percent. (The increase in government borrowings is largely due to the rise in government investment issues and government securities, which reached RM412bn by end-June 2012, up 71 percent from five years ago.)
IMF staff expect general government gross debt to surge past RM700bn to top 55 percent in 2016-2017 based on present policies.
Which means whoever is elected to government in the coming general election has a real job to do to keep a lid on, if not reduce, the debt.
But even this government debt figure of RM502bn in 2012 tells only three quarters of the story. It does not include off-balance sheet debt or contingent liabilities (i.e. debts that COULD be incurred if something goes wrong or in the worst-case scenario as in the PKFZ scandal). Off-balance sheet debts include state government borrowings raised by bond issues.
Such off-balance sheet debt and contingent liabilites have doubled over the last four years from RM53bn to RM100bn now. Apart from matters related to Khazanah and Cagamas, contingent liabilities could include stuff related to 1MDB, Prasarana and Johor Corp, The Edge (22 October) quotes bond analysts as saying. 1MDB, for instance, has been issuing bonds to raise money to buy electricity power producer assets.
Also, as the KL MRT is not part of the government’s development budget, bonds issued by Prasarana to raise billions of ringgit for the MRT project will be regarded as off-balance sheet items – and not included as central government debt.
I moderated a forum yesterday on the coming general election. One of the participants from the floor wondered aloud if Malaysians would be fearful of voting for change in the coming general election given the uncertainty over whether there would be a smooth handover of power if the ruling coalition loses after 55 years in power.
But then another participant said people now are even more fearful of the country’s growing level of indebtedness and the massive corruption and this fear alone would trump all other considerations when they go out to vote. We saw an early indication of this overriding concern in the phenomenal turnout at the Bersih 3.0 rally, when people put aside their fears despite knowing there could be heavy-handed police action.
Malaysian government debt has been steadily rising in recent years and is expected to touch RM502bn this year or 53.7 percent of GDP on the back of a rapid rise in issues of quasi-government bonds and securities. (The legal threshhold is 55 percent.) But this does not include sizeable contingent liabilities or off-balance sheet items.
Click to enlarge the following general government gross debt data from the International Monetary Fund:
At the onset of East Asian economic crisis, general government gross debt compared to GDP had sunk to a a low of 32.3 percent, according to IMF figures. By 2000, it had risen to 35.3 percent and by 2008, it had touched 41.2 percent. And now it is has soared to over 53 percent. (The increase in government borrowings is largely due to the rise in government investment issues and government securities, which reached RM412bn by end-June 2012, up 71 percent from five years ago.)
IMF staff expect general government gross debt to surge past RM700bn to top 55 percent in 2016-2017 based on present policies.
Which means whoever is elected to government in the coming general election has a real job to do to keep a lid on, if not reduce, the debt.
But even this government debt figure of RM502bn in 2012 tells only three quarters of the story. It does not include off-balance sheet debt or contingent liabilities (i.e. debts that COULD be incurred if something goes wrong or in the worst-case scenario as in the PKFZ scandal). Off-balance sheet debts include state government borrowings raised by bond issues.
Such off-balance sheet debt and contingent liabilites have doubled over the last four years from RM53bn to RM100bn now. Apart from matters related to Khazanah and Cagamas, contingent liabilities could include stuff related to 1MDB, Prasarana and Johor Corp, The Edge (22 October) quotes bond analysts as saying. 1MDB, for instance, has been issuing bonds to raise money to buy electricity power producer assets.
Also, as the KL MRT is not part of the government’s development budget, bonds issued by Prasarana to raise billions of ringgit for the MRT project will be regarded as off-balance sheet items – and not included as central government debt.
I moderated a forum yesterday on the coming general election. One of the participants from the floor wondered aloud if Malaysians would be fearful of voting for change in the coming general election given the uncertainty over whether there would be a smooth handover of power if the ruling coalition loses after 55 years in power.
But then another participant said people now are even more fearful of the country’s growing level of indebtedness and the massive corruption and this fear alone would trump all other considerations when they go out to vote. We saw an early indication of this overriding concern in the phenomenal turnout at the Bersih 3.0 rally, when people put aside their fears despite knowing there could be heavy-handed police action.
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