Singapore’s debt servicing ratio is far lesser than Malaysia’s

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Malaysia’s debt is not at such a manageable level, despite what the Malaysian government is saying.

The critics of PM Najib Razak’s government said they are concerned over how interest is being paid to service debts and whether borrowing by state firms hides a growing problem.

Last month, Prime Minister Najib Razak said total government borrowings of RM685.1 billion (S$231 billion) last year compared favourably against other countries because they formed only 50.9 percent of Malaysia’s economy, or gross domestic product (GDP).

“Malaysia is better than developed countries such as Singapore at 112 percent, the United Kingdom at 89.3 percent, Canada at 92.3 percent,” the Premier said.

However, Singapore spent far less servicing that debt, using only 6.1 per cent of its revenue in 2016. Malaysia used 12.5 percent of its income on interest payments that year, said Straits Times.

When Datuk Seri Najib took over the country’s leadership in 2009, the government’s interest burden was less than 9 per cent of its revenue. That figure has been rising steadily since.

This year, the state expects to pay RM31 billion in interest, more than double the amount paid in 2009.

This amounts to nearly all the personal income tax the government expects to collect or more than two-thirds of its takings from the unpopular goods and services tax it began levying in 2015.

This is a trend that will more likely end in a Budget crisis for Malaysia by 2023, the year Najib has set to narrow the budget deficit.

Rating agencies have flagged interest payments and low government revenue as a challenge for Malaysia, which is single-A rated. Countries like Singapore are triple-A rated, which means they can borrow at cheaper rates.

They say weak debt affordability will remain a drag on Malaysia’s overall fiscal metrics and will remain a challenge.

20 COMMENTS

  1. True, but singapore pay low interest because they use cpf. Hence the people get short changed when they are not paid market interest rate.

    • incorrect. market interest rate (S$) is close to zero. CPF pays higher.
      MYR has nigher interest rates – but also higher inflation.

    • Yes! Our living standard is 3rd world. But our cost of living is top of the 1st.
      Our income taken by government in all ways, all channels….you join them…get some discounts buying groceries, heavily subsidized tours, free feast.

  2. Taxes could be evaded in Malaysia, our car owners have premium road taxes and COEs, we pay gases & utilities @ premium prices, ERPs collections are by millions daily, property taxes are by types and not by sizes, etc….all these mentioned are paid by citizens! Of course..we have lower debt ratio than many countries. Why don’t you compare with countries like Brunei, Macau, Afghanistan, Estonia, etc. They could as low as or even lower than Singapore.

  3. Our late LKY catch our pahongchai in early 60 Now MR LSL let all the Uber n Grab on the road also like our Pahongchai in our early 1960
    Now I am driving Grab Hitch is also like pahongchai

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