Written by Pak Sako
Contributors
CPI Introduction
This is the second part of a three-part CPI series on Malaysian debt.
The first part, entitled, 'Investigate Malaysia's debts now' , surveyed the overall debt situation.
This part examines the trend in government debt.
The upcoming part will concern Malaysia's total debt.
Statistics reveal that in the last 15 years, the Malaysian government's debt increased at an unprecedented rate.
The graph below shows the statistics for the government's combined domestic and foreign debts from 1991 till the present. Forecasts are provided up to the year 2017.
The figure shows the government's borrowings from the savings of domestic citizens and from foreign creditors.
Here we ignore private debt, even though it adds to the government's debt burden, because a portion of private debt is publicly guaranteed. We also ignore other unrevealed debts.
What the statistics are saying
During the 1990s, the reported debt level was mostly flat. It declined slightly towards the end of the decade. At the close of 1991 it was RM99 billion, and by the end of 1996 it was close to 91 billion.
After 1997, the government's debt began to steadily climb until 2007. In those 10 years, the debt level rose from RM91billion to RM274 billion. This is an increase of RM183 billion, or an annual average addition of debt of RM18.3 billion.
From 2008 onwards, the borrowings escalated exponentially.
In 2008 alone, an extra RM43 billion of debt was amassed. From RM274 billion at the start of that year, the debt level rose to about RM502 billion by the end of 2012 — an increase of RM228 billion in five years. The average increase in debt in this period was RM45.6 billion per year.
The IMF forecast the debt level for the years 2013 to 2017. The annual increase in debt is predicted to be higher, at a yearly RM55.4 billion. The projected debt level for 2017 is RM779 billion.
This assumes that there is still plenty of domestic funds available to carry the borrowing up to that level (the lion's share of government debt, is after all, domestic debt).
If not, debt would have to be secured from external sources.
The assumption is also that the government will continue to borrow. This is likely to be true. As we have seen, the trend suggests that the government's appetite for debt has been growing, not abating.
The annual increases in debt are substantial sums: a single year's borrowing can dwarf a decade's worth of inward foreign direct investment.
There has been no sign of the debt accumulation reducing or levelling out since the year of the East Asian economic crisis of 1997.
Large government deficits were first incurred in the aftermath of this crisis. Then-prime minister Mahathir Mohamad justified this as part of government spending in commercial enterprises to stimulate the economy.
In reality, the loan proceeds were allegedly used for questionable purposes, such as to fund large-scale projects awarded to crony capitalists and to bail out their failing companies.
The federal government's borrowing shifted into higher gear from 2008, the year the Barisan National coalition lost its two-thirds parliamentary majority.
The deficit expenditures have been justified as a short-term tool. But they have continued for almost a decade and a half; they have become a permanent feature of the government’s financial policy.
The government's financial imprudence is therefore a primary cause of the country's indebtedness.
What this means for the average citizen
It is pertinent to ask whether at this rate Malaysia will attain in 2020 the so-called high-income status envisioned by the New Economic Model.
In the graph, we can see that the government's debt could come close to RM1 trillion by that year.
The actual debt level might, of course, fall well short of that.
Even so, the strain of the debt load on the people is likely to be significant.
Consider the amount of interest payable every year for the current debt of RM502 billion, or for RM779 billion in 2017. Information on this needs to be disclosed and put into the public realm.
Undertaking debt on this scale is unsustainable for a country of our size and economic potential. The World Bank has said that the Malaysian economy is likely caught in a 'middle-income trap'. Economic growth in the years ahead is projected to be slower. Other contributing factors include Malaysia's wide income and wealth disparities.
When we are compelled to push our land and labour resources to new limits to produce economic growth in the attempt to surmount large debts, there will be damaging social and environmental consequences. We will have to rapidly liquidate our oil and other resources at the expense of the wellbeing of future generations.
The average citizen could be taxed more.
To free up cash to service debt, there could be cost-cutting in the provision of public services, such as healthcare. This might already be happening; recently there were shortages of medicines and blood tests in the public hospitals and health clinics. Workers might also face longer working hours for the same or lower income.
A more devious method may also have to be deployed to deal with domestic debt.
This is when the borrowing government increases money supply by printing money to devalue the debt. The lending citizens lose out. Inflation speeds up and the currency will weaken.
In summary, a 'new normal' of lower standard of living is probable, given:
(i) the increasing scale of government debt and the repayments required for these, and
(ii) the country's comparatively limited earning potential, bearing in mind the 'false' economic growth being attained by irresponsibly depleting natural resources, polluting the land and squeezing greater 'productivity' out of the workforce.
Tackling debt ought to be a major subject of political discourse in Malaysia.
Bajet Alternatif Pakatan Pembangkang Bercanggah...
ReplyDelete:o Bajet yang dibentangkan oleh Dato’ Seri Najib nampaknya cukup ampuh sehingga menyebabkan Pakatan Rakyat terpaksa terus memperkatakannya semata-mata untuk mencari kelemahan dan menimbulkan keraguan.
:o PR juga harus terus mempertikaikan Bajet tersebut bagi mengalih pandangan rakyat daripada Bajet tong kosong yang dibentangkan mereka.
:o Secara amnya, jumlah peruntukan antara kedua-dua Bajet tidaklah banyak berbeza. Yang membezakan kedua-duanya ialah pertama, ruang lingkup atau skop golongan rakyat yang mendapat manfaat di mana Bajet BN merangkumi semua golongan dari OKU hinggalah kepada korporat tetapi Bajet PR hanya melibatkan rakyat secara umum.
:o perancangan BN jelas mengambil kira kesan dalam jangka masa panjang tetapi PR hanya fokus kepada kesan segera.
:o Bajet BN adalah menjurus kepada kesejahteraan rakyat dan kemajuan negara tetapi PR hanya menumpukan kepada faedah langsung kepada rakyat tanpa memikirkan kesannya kepada ekonomi negara.
:o Bajet BN adalah selari dan tidak pernah tergelincir dari corak dan jatidiri negara yang berlandaskan dasar-dasar ekonomi sedia tetapi Bajet PR kelihatan cenderung untuk mencabar dasar-dasar negara, malah tidak begitu konsisten dengan Buku Jingga mereka sendiri.
:o Jawapan yang diberi oleh PR mengenai percanggahan Bajet Alternatif dengan Buku Jingga menunjukkan yang mereka sememangnya berniat untuk mengelirukan rakyat.
:o Bagi menutup mata rakyat dari menyedari putar-belit mereka, PR mewar-warkan bahawa Bajet yang dibentangkan mereka akan membolehkan rakyat memiliki pendapatan boleh diguna pakai tambahan sebanyak RM930 setiap bulan iaitu dari penjimatan harga kereta yang lebih rendah iaitu sebanyak RM70, penjimatan daripada penghapusan tol (RM50), penghapusan pinjaman bagi peminjam PTPTN yang layak (RM200), elaun pengajaran khas yang dijanjikan dalam Buku Jingga (RM500), sumbangan kerajaan ke dalam Caruman Wanita Nasional (RM50) dan penjimatan daripada harga makanan dan barangan susulan kos minyak dan pengangkutan (RM60).
:o Bukan semua rakyat terlibat dengan pinjaman PTPTN, dan bukan semua rakyat bekerja sebagai guru yang akan mendapat elaun RM500 sebulan serta bukan semua rakyat perlu melalui jalan bertol, melainkan mereka yang tinggal di bandar besar. Sedangkan majoriti rakyat berada di kampung-kampung dan bandar-bandar kecil. Oleh itu, bagaimanakah nilai penjimatan RM930 itu bagi diri mereka-mereka ini?
ReplyDelete:o penjimatan harga kereta sebanyak RM70 tidak akan membawa banyak perbezaan. Manakala penurunan harga minyak dan makanan adalah bergantung kepada harga pasaran dunia dan bukan seratus-peratus di tangan kerajaan PR.
:o katakanlah kerajaan PR masih mampu menunaikan semua janji ini, rakyat mungkin boleh bergembira, tetapi hanya untuk sekejap cuma. Ini kerana pendidikan percuma, penghapusan PTPTN dan tol, penurunan harga minyak dan barangan serta duti eksais kenderaan bakal meletakkan negara dalam keadaan krisis dalam masa hanya beberapa tahun dari perlaksanaannya.
:o Pendidikan percuma serta penghapusan tol dan PTPTN bermakna kos akan ditanggung oleh kerajaan, sekali gus menjejaskan peruntukan untuk bantuan dan program lain yang lebih memberi manfaat kepada rakyat.
:o Selain menyumbang kepada masalah lain iaitu kualiti pelajar yang menurun lalu membawa kepada masalah sosial yang bertambah. Begitu juga dengan kualiti penyelenggaraan lebuhraya juga tidak mustahil akan mengalami nasib yang sama.
:o Manakala penghapusan duti eksais kenderaan sebanyak 20% pula akan menyebabkan industri kereta terpaksa menanggung harga barangan yang lebih tinggi untuk terus beroperasi serta mampu membunuh industri automobil nasional dalam jangka masa panjang. Ini pastinya satu kerugian yang besar untuk negara dan juga rakyat termasuk vendor-vendor yang terlibat dalam industri ini.
Dari semua ini, kelihatan jelas bahawa PR menganggap rakyat semua adalah bodoh-bodoh belaka dan tidak mampu mengupas dan meneliti kesan jangka panjang dari Bajet yang dibentangkan mereka.
Hakikatnya, rakyat dapat melihat dengan jelas bahawa PR tidak berpandangan jauh dalam merancang Bajet kerana Bajet Alternatif PR adalah sebenarnya Bajet Pilihanraya.
Membuktikan kerajaan gagal menguruskan kewangan dengan bijak.
ReplyDeleteKerajaan akan memberi tumpuan kepada usaha mengurangkan hutang negara selain membantu rakyat serta melonjakkan ekonomi negara dalam merangka Bajet 2013.
ReplyDeleteMenteri Kewangan Kedua Datuk Seri Ahmad Husni Hanadzlah berkata hutang negara kini mencapai 53 peratus daripada Keluaran Dalam Negara Kasar (KDNK).
ReplyDelete"Kita sedang lihat bagaimana kita nak kurangkan hutang negara dan kita mempunyai beberapa kaedah yang sedang kita lihat.
kerajaan kini dalam proses menggubal Bajet 2013 yang merangkumi perbelanjaan mengurus dan perbelanjaan pembangunan.
ReplyDelete