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Malaysia Will Go Bust & On The Way To Becoming Another Sri Lanka – National Debt Increased To RM1.35 Trillion & Worsening Corruption Index

And let’s not forget that household debt stood at RM1.35 trillion, higher than the federal government debt, in 2021. Some economists warn that high household debt, apart from deleveraging economic activity, would make recessions more severe.

The International Monetary Fund (IMF) noted in early March that Sri Lanka’s projected government debt had risen from 94% of its gross domestic product (GDP) in 2019 to 119% of the GDP in 2021,

Successive governments borrowed money despite persistent fiscal and current account deficits, causing public debt to grow to such an extent that it has become unmanageable. The country faces a dilemma: Should it repay its debts or spend the money helping its suffering people? No wonder it is seeking a bailout package from the IMF.

The problem with Sri Lanka is that it has been living beyond its means for years and years.

And I’m afraid if we in Malaysia don’t manage our debts well, we may be headed in the direction of Sri Lanka.

Public sector debt increased to RM1.35 trillion or 89.5 per cent of gross domestic product (GDP) as at end-June 2021, mainly due to higher federal government debt resulting from borrowings to finance deficit, Covid-19 assistance and stimulus packages during the year.

In 2020, it was RM1.25 trillion or 88.6 per cent of GDP.

The federal government debt remains the largest component with a share of 70.7 per cent of the total, followed by non-financial public corporations (NFPCs) (22.9 per cent) and statutory bodies guaranteed debts (6.4 per cent), the 2022 Fiscal Outlook and Federal Government revenue estimates released by the Finance Ministry (MoF) today revealed.

Public sector debt comprises outstanding debt obligations of the federal government, state governments, NFPCs, and sovereign-guaranteed debts of statutory bodies.

The report said the net increase in NFPCs debt to RM309.9 billion was attributed to the loan drawdown for ongoing infrastructure projects, as well as issuances of bonds abroad by public corporations.

In addition, the statutory bodies’ debt increased to RM86.7 billion due to additional guaranteed loans raised by the Federal Land Development Authority (Felda) and Public Sector Home Financing Board (LPPSA) for their investment and refinancing purposes.

Federal government debt to reach 66 per cent of GDP in 2022.

The government will continue its expansionary fiscal policy in Budget 2022 to ensure the people’s well-being, protect businesses continuity and revitalise the economy.

In addition, the 12th Malaysia Plan (12MP) 2021- 2025, with a development expenditure ceiling of RM400 billion, is expected to increase federal government borrowings.

As such, gross financing requirements, including additional allocation for the Covid-19 Fund, are expected to remain sizeable at about 12 per cent ratio compared to GDP.

The federal government’s overall debt is projected to reach 66 per cent to GDP, while its statutory debt at 63.4 per cent by the end of 2022, lower than the new debt threshold of 65 per cent to GDP as approved by Parliament.

And let’s not forget that household debt stood at RM1.35 trillion, higher than the federal government debt, in 2021. Some economists warn that high household debt, apart from deleveraging economic activity, would make recessions more severe.

Malaysia drops five spots to 62 in TI-M’s corruption index rankings

Malaysia dropped five spots to rank 62 in the global rankings of Transparency International Malaysia’s (TI-M) Corruption Perceptions Index (CPI) 2021, marking the second consecutive year that the country has seen a decline in the rankings.

During a briefing on Tuesday, TI-M president Dr Muhammad Mohan said Malaysia’s score fell below the 50-point mark to 48 for 2021, from 51 and 53 in 2020 and 2019 respectively.

The CPI uses a scale of zero to 100, with lower scores indicating higher corruption.

A total of 180 countries and territories were scored, with two-thirds of countries scoring below 50. The global average CPI score stood at 43.

Among the ASEAN countries, Malaysia ranked third after Singapore (score of 85) and Brunei (score of 60). Notably, Singapore was the only Asian country to make it to the top 10, ranking fourth after Denmark, Finland and New Zealand.

Meanwhile, among selected Islamic countries, Malaysia ranked sixth after the UAE, Qatar, Brunei, Oman and Saudi Arabia.

“We need to be very concerned about our declining CPI score. With reforms coming though, we can improve our scores, and for a start, we should be aiming for above 50 points,” said Muhammad.

He highlighted several reasons that could be the factors behind Malaysia’s declining score, including the stall in institutional reforms.

“The last four governments have lacked political will to table the Political Financing Bill. As a result, money politics is still rampant, both during elections and as a scheme for corruption.

“The proposed IPCMC (Independent Police Complaints and Misconduct Commission) Bill was revised to a watered down, ineffective bill. There also has been no progress on reforms to the Malaysian Anti-Corruption Commission (MACC), which were recommended in 2015,” he said.

Muhammad also pointed out the acquittals or discharges not amounting to acquittal to high profile personalities in several corruption cases with no clear clarification from the Attorney General’s office, the suspension of parliament during the Movement Control Order and the continued lack of political will from various administrations in fighting institutional corruption.

Besides that, other factors included the appointments of politicians without experience to head government-linked companies and government-linked investment companies, lack of progress on amendments to the Whistleblowers Protection Act 2010, as well as the continued adverse findings and repeated governance failures observed in the Auditor General’s annual report.

On the other hand, TI-M lauded the positive developments so far, including the memorandum of understanding between the government and Pakatan Harapan which included the reduction in the minimum voting age to 18, automatic voter registration, Malaysia Agreement 1963, Anti-Hopping Law or recall elections, parliamentary reforms and limiting the tenure of the prime minister to 10 years.

It also viewed positively the judicial independence displayed in ongoing corruption cases.

To improve Malaysia’s CPI score, the non-profit made several suggestions including narrowing the scope of the Official Secrets Act, so that matters of public interest such as directly negotiated contracts can be released, while only matters related to national security are protected.

It also mooted for a platform which provides regular updates on the status of pending high profile cases, as well as a public dashboard to monitor the implementation of and disclose progress of the National Anti-Corruption Plan (NACP).

The MACC also has to be reformed into truly independent, reporting directly to parliament, recommended TI-M, while public officials found guilty of corruption should be compelled to vacate their official positions, even while they are going through the appeal process.

“TI-M also urgently calls for full implementation of the NACP, acceleration of the tabling of the Political Financing Act, the independence and transparency of key institutions like the MACC and the Attorney General’s Chambers, an anti-hopping law to stop party hopping, implementation and empowerment of Undi 18, and the enactment of parliamentary reforms,” said Muhammad.

Looking ahead, he said the public must play its role in calling out corruption — not only by protesting but also communicating through social media — and added that there must be space for the people to speak up.

“The rakyat needs to be the eyes and ears. If there is wrongdoing, it should be exposed. That is how it is. The public has to play a part in this.

“I am appealing to everyone. We need to say no to corruption. Our country must be known for its integrity, not for its corruption,” said Muhammad.

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