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Malaysians, stahp! Your country is not going bankrupt like Sri Lanka.

Don’t hit the panic button yet, Malaysians. Contrary to popular belief on social media that your country is on path to become bankrupt like Sri Lanka, the probability of that happening “is slim”. As Sri Lanka goes bankrupt, with inflation soaring to 54.

6 percent and its president resigning and fleeing to Singapore, Malaysians have begun speculating the probability of their country going down the same route. The reason is pretty understandable: Malaysia experienced a political crisis that saw an allegedly corrupt party (I said allegedly, okay) return to power after a sneaky political move. As the pandemic drags on and many Malaysians are going bankrupt, this has certainly become the talk of the town.

This is according to Malaysia’s Finance Minister Tengku Zafrul Tengku Abdul Aziz, who responded to a question in Parliament on July 19, 2022. “In April this year, the International Monetary Fund (IMF) expressed its confidence that our gross domestic product (GDP) will grow at a rate of 5. 75 percent.

“If we compare our economic indicators to Sri Lanka, it is clear that our economy is far much stronger than theirs. The possibility of Malaysia going bankrupt like Sri Lanka is very low,” Zafrul clarified, according to New Straits Times . Recently, the IMF cautioned that developing high-debt Asian nations could follow a similar trajectory to Sri Lanka.

“Countries with high debt levels and limited policy space will face additional strains. Look no further than Sri Lanka as a warning sign,” IMF’s Managing Director Kristalina Georgieva had said. While she didn’t specifically mention names, four nations have been identified but none of them include Malaysia.

While assuring that the Malaysian government will be careful in managing the country’s debts and finances, Zafrul explained that the nation’s ability to borrow money to assist people is not based on its current amount of national debt. “There are quarters who say Malaysia’s debt to GDP ratio, which is at 63 percent, is still low compared with developed countries like Japan at 263 percent, Singapore at 133 percent. “The ability of a country to increase borrowings does not solely depend on the debt ratio against the GDP, but also debt affordability and debt sustainability,” he explained.

In case you’re wondering, Malaysia’s debt service ratio is at 16. 3 percent and is expected to rise to over 18 percent by the end of 2022. “This means that for every ringgit in revenue the government collects, almost 20 sen will be used to service the debt interest, not including the principal sum.

” Compared to the debt service ratio of the U. S. , the United Kingdom, and Japan, Malaysia’s figure is much higher.

“On average, the tax-to-GDP percentage ratio is 33 percent. So although the country’s economy has improved in 2022, the growth does not add to more revenue for us to have more debt. ” In other words, Malaysia can’t afford to take on more debt because it needs to grow its revenue first.

IMF warns high-debt Asian nations could share Sri Lanka’s fate. Here are 4 of them. Sri Lanka president flees to Singapore after protesters storm presidential palace Bankrupt Sri Lanka’s inflation hits 54.

6%. The cause: Corruption. After an Easter terror attack, Sri Lanka cut access to social media.


From: mashable
URL: https://sea.mashable.com/life/20878/malaysians-stahp-your-country-is-not-going-bankrupt-like-sri-lanka

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