More disturbing are the claims that the Malaysian government has large hidden debts.
These are “contingent liabilities” and “off-balance sheet” borrowings, which are said to have amounted to RM117 billion in 2011 (see ”Hidden debt” edges M’sia beyond 55pct limit’, Malaysiakini, 27 September 2012).
There is also little knowledge about annual interest payments and the due dates of debts.
Any meaningful public discussion of Malaysia’s debt situation must consider all of the above.
Neither the Ministry of Finance nor Bank Negara give a full picture of all of the above.
Mahathir Mohamad said nothing about any of the above.
He told Malaysians not to worry about debt because our foreign reserves are strong.
But foreign reserves or public wealth are not for settling the illegitimate debts accumulated by corrupt regimes. They are not to be used as collateral to pile on new debts or service existing ones.
The size of the foreign reserves gives false comfort. During the 1997 East Asian crisis the government devalued the total stock of ringgit using a currency peg. Foreign reserves took the hit and shrunk.
Mahathir Mohamad’s comments lull Malaysians into a false sense of security. These comments should however serve as a wake-up call. Malaysians should demand for clarification about Malaysia’s total debt and its consequences. The Ministry of Finance and Bank Negara should respond.
So, Does it Affect YOU?
Some said yes, some said no, some don't know what I said.
How can it not affecting YOU?
- You live in Malaysia
- You income in Ringgit Malaysia (unlikely get big jump every year)
- Your expenses in Ringgit Malaysia (ha ha.... things are more expensive now, right?)
- Your house/investment property transaction in Ringgit Malaysia
National Debt needs to be paid? How? By printing MORE money, use new fund to pay old debt, thus pushing the value of RM down.... then, inflation comes.
So, I ask again. Does it Affect YOU?