Malaysia's Debt is Manageable and Healthy

The ratio of debt to gross domestic product (GDP), which stands at 53 per cent currenty, is still considered "healthy" for the country as trading and revenue continue to rise, as previously said by Former Prime Minister Tun Dr Mahathir Mohamad. Furthermore, we have an amount of about US$140 BLN of savings reserve in Bank Negara Malaysia, compared to of only US$30 BLN during Mahathir's administration, where we have even survived the debt trap of International Monetary Fund in the past.

One of the "faq" on government debts is that "Government debt is likened to household debt – if we spend more than we earn, we’ll go bankrupt"

When that seemingly looks like the common sense which being held by most people, the problem is that it’s also mostly wrong. Because it only works if it is "household debts'' and while being true to itself, it's another way around when it is "government debts".

Why that’s not true of government generally, is because it’s “income” comes largely from direct and indirect taxation – the rates of which are determined by the government itself. So in a very real sense, governments don’t face the hard constraints that households and companies do. Instead its a soft constraint of what level of taxation citizens are willing to bear.

Plus, Malaysia also has large deposits in institutions such as the Tabung Haji, Permodalan Nasional Bhd and Felda Scheme.

Our exports to throughout the world are also still on the uptrend, our surplus is still growing.

Malaysia's total trade posted a three per cent growth last year despite global economic and financial turmoil and little demand.

Source:
http://oskortos.blogspot.com/2013/05/hutang-negara-bahagian-1.html
http://www.bernama.com

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