Khaled: World Bank has called Harapan's bluff

A World Bank economist's observation has disproved Pakatan Harapan's claim that the nation's debt was spiralling out of control, Umno vice-president Mohamed Khaled Nordin said today.

Citing the recent comments by World Bank Malaysia's lead economist Richard Record, Khaled said the economist pointed out that 97.7 percent of the federal government's debt was in ringgit denomination and therefore limits exposure to forex shocks.

Record also said 70 percent of the debt is medium-term with a maturity of above three years, so "there is a limited risk on rollover terms".

He also cited Mara Warwick - the World Bank country director for Brunei, Malaysia, the Philippines and Thailand - as describing Malaysia as a "success story" and on track towards becoming a high-income economy.

In view of these assessments, Khaled said the Harapan administration was not giving an accurate and fair description of the nation's debt and risks.

"It is as though (the current government) was bent on damaging the image of the BN government, which had strengthened the economy and received praise from the World Economic Forum, World Trade Organisation and the International Monetary Fund.

"The government, in particular the Finance Ministry, should present an in-depth picture of the nation's debt in relation to the risk of bankruptcy in an objective and realistic manner," Khaled added in a statement.

The former Johor menteri besar also accused the Harapan administration of exaggerating the debt situation in order to avoid or postpone the implementation of its election pledges.

Khaled said the establishment of Tabung Harapan Malaysia was another tactic to reinforce the wrong perception on the nation's debt.

"The government should not allow an initiative which can frighten some citizens with a picture of the economy and debt that are inaccurate.

"It is reasonable to say that (Tabung Harapan) is a shortcut for the government to generate revenue," he added.

Record had talked about Malaysia's debt situation during the launch of World Bank's June 2018 Malaysia Economic Monitor two days ago.

The report noted that although direct government debt, as a percentage to GDP, was on the downtrend from 54.5 percent in 2015 to 50.8 percent in 2017, government guaranteed debts was on the uptrend from 14.7 percent in 2012 to 17.6 percent in 2017.

Since coming to power, the Harapan administration said although direct government debt only represented 50.8 percent of GDP, if government guarantees and liability payments were taken into account, the total debt was 80.3 percent of GDP as of Dec 31 last year.

The government guarantees, often for GLC loans and liability payments, were described by the Harapan administration as "hidden" debts created by the previous administration.

Khaled's statement did not refer to World Bank's observation on government guaranteed debts. - Mkini

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