Hutang Negara: RM1.2 trillion, patutkah kita bimbang? Analisa Ringkas

Written by: Averroes

We often time hear the word debt, numerous times actually and this term has been recurring in Malaysia for a very long time. From my observation, the word debt to Malaysians can get spicy and spiral out of control, until Malaysians 'melatah' and 'meroyan' because of such word. People had been rooting for 'innovative politics' in Malaysia as they are tired and feel handicapped due to the archaic and obsolete administration of the previous government as prior to the 14th General Elections. 

Now, they have made a comeback with no mandate or manifesto whatsoever and it is still unclear whether they have reverted back to their old practices, since they have not provided their actual real plans to the Rakyat, but rather controversial sways of events, including a one-day parliamentary sitting, the replacement of the Dewan Rakyat Speaker, the brazen party-hopping in Johor, Melaka, Perak, Sabah and Kedah. Though, the author does not ignore some contributions that they have made during the Covid-19 pandemic. 

The Malaysian debt is now what the current government should focus upon as the burden rests on their shoulders now. According to the Finance Minister Tengku Zafrul Aziz answering a question by Tony Pua on Federal Government debt, Government Guarantees and lease payments for Public Private Partnership (PPP), the government's total debt liability was at a staggering RM1.2 trillion, but he reasserted that it should not be implied that Malaysia had gone bankrupt. 

He scapegoated this on the new government that succeeded in the GE-14 as it was their off-budget. Though, a reputable man with no political affiliations such as Tengku Zafrul must have said that due to his ministerial responsibility, otherwise he might have given a different opinion. The government direct debt stands at RM854 billion and he further stressed that the debts were being paid in accordance with time. In March a few months ago, it was RM823.8 billion which was an estimated 58.8% of GDP and it crossed the self-imposed administrative limit of 55% GDP. Though, since it is self-imposed, the author will not deal whether the excess is unconstitutional or illegal. 

Though sources suggest that because of governmental policies and actions to smooth the economic pitfalls, sacrifices are made and that the fiscal deficit will increase to a 6.0% GDP, double the original aim of 3.2% of GDP during the 2020 budget, higher than the 2008 Global Financial Crisis which was 6.7%. 

Among the policies made by the government include the RM295 billion Prihatin Economic Stimulus Package which is 21.1% of the GDP and the short-term economic recovery plan of RM45 billion which is 3.2% of the GDP, linked with the fiscal spending. The government had attempted to borrow more money to deal with budget deficit or any fiscal stimulus after netting off revenue collection and re-branding key aspects of expenditure and reducing non-critical expenses and subsidies rationalization. 

Constitutionally speaking, the government has the authority to introduce expenditure and the policies made as under article 102(b) of the Federal Constitution. Article 103(1) of the Federal Constitution also mentions that the power to create Contingencies Fund is permissible for urgent and unexpected need of expenditure. This provision is read with clause (2) where that any advances be made, a supplementary estimate is needed to be presented and a Supply Bill introduced immediately for replacing the amount advanced. 

Additionally, in our Malaysian law, the rules pertinent to borrowing is the Loan (Local) Act 1959, the Treasury (Local) Act 1946 and the Government Funding Act 1983 which the government's operating expenditure must be utilized only for development. 

In our present situation as Covid-19 sparks a global economic crisis and chaos for laborers and industrial sectors, the Malaysian government was left no choice to ramp up spending by borrowing and issuing public debt. In theory, if Malaysia were to suddenly print large amounts of money, we might end up in a similar desolation of the Weimar Republic and Zimbabwe were prices of goods had skyrocketed. Inflation is horrifying in parts of Colombia as well currently speaking. 

The last time Malaysia ever printed money was during the Asian Financial Crisis of 1997 to 1998 when Danaharta provided triple-A-zero-rated coupon bonds toward institutional investors such as EPF, Khazanah, pension funds and insurance companies which was then exchanged for non-performing loans from engaging banks. Thus, this financial debt for some Malaysian is provoking anxiety as the future generations might have to deal with higher form of taxes. 

In 2008, there was a global economic recession that in the impending struggle, Malaysia still maintained financial stability as our economy was stable due to high levels of capital adequacy ratio which our budget deficit was only 7.0 and lower than that previously. According to Investopedia, deficit is defined as where the quantity of resources, money particularly falls short of what is expected. It is when expenses goes beyond the limit of revenues, imports are frequent than exports and that liabilities defeats asset. High deficits may shed some concerns during the Covid-19 outbreak.

To conclude, there must be solutions to this hassle though the author is not well-versed in economics, he trialed to explain the economic situation and legal implications.