By A Jalil Hamid and Sharen Kaur
Published in NST, July 15, 2016
Managing the country’s fiscal deficit is crucial because it will ultimately impact the people, said Second Finance Minister Datuk Johari Abdul Ghani.
“It is important for us to manage fiscal deficit because if we don’t, it will affect our sovereign rating. Today, we are A-, but assuming our rating drops to triple B, then our interest cost will be higher. When interest cost is higher, the cost of doing business is higher. Ultimately, the people will suffer because if we look at our household debt, we are among the highest in the world. We are close to 89 per cent to GDP (gross domestic product).”
Household debt includes housing, car, credit card, personal and investment loans.
“So, if the interest increases, all these people will be affected because they will have to pay more interest,” said Johari.
In an exclusive interview with the New Straits Times, the newly minted minister describes how Malaysia’s economy has been affected by external issues beyond its control, including the drop in oil prices, slowing global economy and uncertainty over China’s economic rebalancing.
Amid such global uncertainties, the government’s focus is on addressing internal and domestic economic issues, including fiscal deficit and debt.
Johari said Malaysia’s debt was at 54.5 per cent of GDP, compared with more than 200 per cent in Japan, 120 per cent in the United States and 89 per cent in Singapore.
“It doesn’t mean that if we are at 54.5 per cent, we are good. The issue here is that we must continue to put in check our debt situation so that we are always in a position to match our ability to pay.”
Johari, 52, said Malaysia was still in a good position because it had never defaulted on any loan. He added that debts taken on were utilised to invest in the economy.
“We build our infrastructure, highways, airports and ports. Right now, we are aggressively expanding our public transport, such as the MRT (mass rapid transit) and LRT (light rail transit). We also borrow money to get our sewerage and water systems, and to consolidate all that. But, we need to put a check on this. We have seen a lot of countries, like Greece, for example, where, because they did not manage their debts properly, they are affected. This is something we really need to look at.”
Published in NST, July 15, 2016
Managing the country’s fiscal deficit is crucial because it will ultimately impact the people, said Second Finance Minister Datuk Johari Abdul Ghani.
“It is important for us to manage fiscal deficit because if we don’t, it will affect our sovereign rating. Today, we are A-, but assuming our rating drops to triple B, then our interest cost will be higher. When interest cost is higher, the cost of doing business is higher. Ultimately, the people will suffer because if we look at our household debt, we are among the highest in the world. We are close to 89 per cent to GDP (gross domestic product).”
Household debt includes housing, car, credit card, personal and investment loans.
“So, if the interest increases, all these people will be affected because they will have to pay more interest,” said Johari.
In an exclusive interview with the New Straits Times, the newly minted minister describes how Malaysia’s economy has been affected by external issues beyond its control, including the drop in oil prices, slowing global economy and uncertainty over China’s economic rebalancing.
Amid such global uncertainties, the government’s focus is on addressing internal and domestic economic issues, including fiscal deficit and debt.
Johari said Malaysia’s debt was at 54.5 per cent of GDP, compared with more than 200 per cent in Japan, 120 per cent in the United States and 89 per cent in Singapore.
“It doesn’t mean that if we are at 54.5 per cent, we are good. The issue here is that we must continue to put in check our debt situation so that we are always in a position to match our ability to pay.”
Johari, 52, said Malaysia was still in a good position because it had never defaulted on any loan. He added that debts taken on were utilised to invest in the economy.
“We build our infrastructure, highways, airports and ports. Right now, we are aggressively expanding our public transport, such as the MRT (mass rapid transit) and LRT (light rail transit). We also borrow money to get our sewerage and water systems, and to consolidate all that. But, we need to put a check on this. We have seen a lot of countries, like Greece, for example, where, because they did not manage their debts properly, they are affected. This is something we really need to look at.”
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