The World Bank Group still views Malaysia as a ‘success story’, despite the national debt having reached RM1 trillion. — Bernama photo
KUALA LUMPUR: The World Bank Group still views Malaysia as a ‘success story’, despite the national debt having reached RM1 trillion, said its country director for Brunei, Malaysia, the Philippines and Thailand, Dr Mara Warwick.
“We see Malaysia having a very strong economy and moving towards high-income.
“What we have emphasised in this report (Malaysia Economic Report) is really the importance of looking at the quality of growth, inclusiveness of this growth going forward and how every Malaysian can benefit from the economic success the country has achieved,” she told reporters after the launch of the report here yesterday.
Meanwhile, lead economist Dr Richard Record said the most important thing for the new government to do is ensure that the debt is addressed with transparency, vigilance, as well as careful and prudent management.
He said, the vastness of the debt which is 97.7 per cent in ringgit denomination, should provide a limited risk to the government, when it comes to foreign exchange exposure.
He also said, almost 70 per cent of the debt is medium-term with a maturity of above three years, so “there is a limited risk on rollover terms”.
The World Bank’s Malaysia Economic Report has forecast the country’s economy to grow at the rate of 5.4 per cent this year, underpinned by stronger growth in household consumption.
The stronger near-term outlook for household spending primarily reflects the additional impetus from the new policy measures put forth by the government, including the temporary suspension of the consumption tax.
The report also said ensuring longer-term fiscal sustainability in the new fiscal setting would necessitate a deeper wave of structural reforms to diversify sources of fiscal revenue, rationalise non-essential operating outlays, restructure some of the large-scale infrastructure projects and improve spending efficiency.
The World Bank has encouraged the government to maintain its fiscal deficit target of 2.8 per cent this year. — Bernama