'We could go bankrupt by 2019'
MALAYSIA will go bust by 2019 if it continues to accumulate debt at the current rate of 12 per cent a year, a minister said.
By Zuraimi Abdullah
By Zuraimi Abdullah
To avoid the "Greek incident", Minister in the Prime Minister's Department Datuk Seri Idris Jala said the subsidies given to various sectors must be rationalised.
"Our debt currently amounts to RM362 billion. We don't want to end up bankrupt like Greece with a debt of E 300 billion (RM1.2 trillion).
"If we continue to borrow money at the current rate, we will go bankrupt in 2019 with a debt of RM1,158 billion," said Idris, who is also the chief executive officer of the Performance Management and Delivery Unit (Pemandu).
The government has made recommendations to increase prices of subsidised big ticket items such as fuel, gas, food and toll.
"The time for subsidy rationalisation is now. Otherwise, we have a time bomb on our hands," Idris remarked.
He said based on the Organisation for Economic Cooperation and Development (OECD) data, Malaysia's subsidy spending as a percentage of gross domestic product (GDP) was a staggering 11 per cent between 2006 and last year.
This was almost three times more than non-OECD countries like the Philippines and 55 times more than Switzerland, an OECD country.
"Our subsidy bill is not sustainable, especially in light of the rising budget deficit and government debt (as a percentage of GDP).
"It is higher than Indonesia at 28 per cent and getting closer to the Philippines at 62 per cent," he highlighted.
Idris said studies by Bank Negara Malaysia showed that inflation should rise to four per cent from 2011 to 2013, before slowing at three per cent post-2013 under "a less subsidised" environment.
He also said 97 per cent of the subsidies are dispensed on a "blanket" basis.
"It is given to everyone regardless of income level, for example, subsidised primary, secondary and tertiary education, medical services, petrol, sugar and cooking oil, as well as welfare aid and susten ance allowance."