Malaysia not at risk of collapsing like Sri Lanka, finance minister Zafrul says

Malaysia is stable and is not at risk of going bankrupt like Sri Lanka, Finance Minister Tengku Zafrul Aziz said, citing the International Monetary Fund’s prediction for the economy to expand 5.75 percent this year as reason for confidence.

“The IMF has never said that Malaysia is facing economic troubles that could bankrupt the country,” he said in parliament on Tuesday (July 19). “If we compare our economic indicators with Sri Lanka, it is clear our economy is far more stable than theirs.”

Still, the government must continue to manage the country’s finances prudently and control the level of debt, he said.

According to a gauge of one-year default probability, Malaysia is at 2.43 percent while Sri Lanka is at 19.4 percent, with a reading above 1.5 percent signifying high credit risk of failure to repay.

The South-east Asian nation, whose budget is strained by inflation-relief efforts is expected to pay up a record RM77.3 billion (S$24.2 billion) in total subsidies this year, with concessions on fuels and cooking gas alone projected to touch RM37.3 billion, Zafrul said last month.

Zafrul said on Tuesday, the jump in palm oil and crude oil prices this year is expected to generate tax revenue of RM10 billion for the country, adding that the government will also gather an additional RM10 billion from income and indirect taxes as the economic growth is expected to be stronger in the second quarter of this year.

Even so, higher revenues would be insufficient to cover the surge in government subsidies, he said.

SOURCE: NEWS AGENCIES