No need for IMF loan, Malaysia is not bankrupt - Tengku Zafrul

14 Sep 2022 11:12pm
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz - Photo: BERNAMA
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz - Photo: BERNAMA

KUALA LUMPUR - Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz has asserted that the International Monetary Fund (IMF) never stated that Malaysia has economic problems that will cause the country to go bankrupt, instead it is confident of the country’s growth prospects.

S&P Global Ratings also expects that Malaysia’s economic policy formulation will put the country in a stronger fiscal position, he said.

The finance minister said this in a video uploaded on his Instagram account in response to a viral video on social media that said Malaysia needs financial aid from the IMF as it faces bankruptcy.

Tengku Zafrul dismissed the viral video as nonsensical, adding that the government has never hired or appointed any party to manage its financials.

What is important is that Malaysia is disciplined in paying its debt obligations, the finance minister said, pointing out that Malaysia has never failed to pay debts that had matured.

"The IMF itself has acknowledged that Malaysia’s debt level is at a manageable level, so is the IMF being paid by consulting firms to say this?”

"Compared to other countries, Malaysia’s economy remains strong although it has to face pandemic challenges and geopolitical tensions that have resulted in higher energy and food prices "So the possibility for the country to go bankrupt and needing to borrow from the IMF is completely not true,” he said.

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Tengku Zafrul said that as of the end of June 2022, the national debt level was about 60 per cent, far lower than the statutory debt ceiling of 65 per cent.

"The ability of a country to expand its borrowings does not merely depend on the debt to gross domestic product ratio, but its ability for indebtedness and the sustainability of the debts.

"Once again, the country’s economic fundamentals are solid, and third quarter growth will be even better,” he elaborated.

He also noted that individual bankruptcy cases in the country have not risen, instead, they have been on a downtrend since 2016.

"This included the period of rising overnight policy rate in 2018, where bankruptcy among youths also showed a downtrend in that year.

"A total of 5,283 bankruptcy cases were recorded, which declined to 3,948 cases in 2019, 2,844 in 2020, 1,884 cases in 2021, and 515 from this past January to April," he noted.

Borrowers are also gradually exiting loan repayment aid programmes and this trend showed improvement in the first quarter where it rose to 92 per cent from the repayment rate before the pandemic, he said.

The claim that the unemployment rate is rising is also not true. "The unemployment rate showed a decline, whereby in April and May, it was at 3.9 per cent, June (3.8 per cent), and July (3.7 per cent), the lowest compared to the highest level in May 2020 at 5.3 per cent. It has been going down for 12 straight months,” he added. - BERNAMA

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