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Anwar vows gradual debt reduction to ensure stability

Publish date: Mon, 30 Jan 2023, 06:18 PM

(Jan 30): Prime Minister Datuk Seri Anwar Ibrahim said his government will work to gradually lower the nation’s debt and narrow the budget gap, without resorting to raising taxes that hurt the poor.

“We have reached the ceiling and we should gradually go down,” Anwar told Bloomberg Television’s Haslinda Amin in an interview on Monday (Jan 30) in Singapore. Otherwise it would be irresponsible to the next generation, he said.

Malaysia had raised the debt limit to 60% of gross domestic product from 55% in 2020 in the early days of the pandemic, and lifted it further to 65% in 2021 to make room for additional borrowings to fund fiscal stimulus. Malaysia’s actual debt is at 61% of GDP, and the law under which the ceiling was raised lapsed on Dec 31.

While Malaysia remains A-rated by credit agencies Moody’s Investors Service and S&P Global Ratings, a reduction in government debt ratio will be key to winning a higher credit score from Fitch Ratings Ltd, which is currently the only one of the three main rating companies to have a lower BBB+ rating on the Southeast Asian nation.

Anwar, who doubles as finance minister, is set to table the revised Budget 2023 to Parliament on Feb 24 and has been preaching fiscal prudence as the Southeast Asian nation stares down still-elevated debt levels in the wake of a Covid-era spending drive. A reformist who heads a multiracial coalition, Anwar has made protecting low- and middle-income groups from rising prices the top priority of his administration.

While he acknowledged that the goods and services tax remains the most transparent and efficient taxation system, he said his government isn’t in a hurry to reinstate the tax that was abolished in 2018.

“I have a huge issue of having to introduce taxation policies or new initiatives when it affects the plight” of the low-income group, he said.

He said Malaysia is fortunate that the revenue from taxes has increased slightly, along with petroleum products.

Malaysia, which runs Southeast Asia’s widest fiscal deficit after the Philippines, has seen its budget strained by the cost of keeping essentials at below-market prices. Government subsidies were forecast to reach a record RM80 billion in 2022, with concessions on fuels and cooking gas alone projected to account for about half the amount.

In December, the government said it would raise electricity prices for multinational companies and heavy users, part of Anwar’s bid to channel subsidies and spending toward the needy. Small- and medium-sized firms and those involved in agriculture and food production will not be affected by the increase.

Earlier this month Anwar had warned that this year’s fiscal position won’t be comfortable, with about RM1.5 trillion in total debt and liabilities and a budget deficit setting around 5.8% of gross domestic product as of last year. He said “we cannot be content” with these figures and added that maximum debt service is approaching unmanageable levels.

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Reduce debt meaning less fund for projects?

2 months ago


cut pension, civil servants & pensioners come after u
cut bumi privileges, bumi come after u
cut fuel subsidy, motorist come after u

so at the end, nothing can cut, all status quo

2 months ago


less project maybe. cut wastage.

2 months ago


n USA, George W Bush caused the US debts increased from USD5 Trillion (Yr 2000, since 2 centuries ago, from 42 presidents) to USD10 Trillion (2008).

Next, Mr Obama caused the debt increased to USD20 Trillion (in 8 years, 2016).

The last 6 years, debt climbed From USD20 Trillion to USD31.5 Trillion.

With this debts, reaching the ceiling, the economy of USA is critically bankrupt if not collapsed.

SO, in Malaysia the initiative to contain/controlling the debts from going higher is very important.

2 months ago


With such a huge debts from the US gov...just like if you have several millions of loans and when each RM10 can only get one teh tarik, then your debts of millions will look not so threatening. Then, probably your lands/house now can fetch double the price. And debts now is looks easy for you. WHY? Inflation!

With such a high debt level, you need inflation...but may not be successful because there are other side effects on the economy when you have caused the inflation.

2 months ago


How the US gov can deal with this USD31.5 Trillion of debts?

2 months ago


Raise the limit and keep issue debt. :) enjoy while it last while he still can. 4-5 presidents before biden did so. what made you think he will do otherwise?

2 months ago

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