MALAYSIA will not take on more debts to pay for its big subsidies bill as it cannot afford it, said Tengku Zafrul Abdul Aziz.

“Our debt-to-service ratio in 2021 was 16.1% and this is expected to be more than 18% this year,” the finance minister told parliament during the Minister Question Time session today.

“This means for every RM1 income the government receives, 20 sen is used to pay interest only and does not go towards paying the debt. Malaysia’s debt-to-service ratio is high compared to other countries.

“The debt-to-service ratio for United Kingdom is 6.6%, the United States is 5.2% while Japan is 4%. Our ability to take on more debt is limited compared to other countries.”

The former banker added that Malaysia’s tax-to-GDP ratio is also lower compared to other Southeast Asian countries.

“The Philippines is around 18%, Thailand is 17% while Singapore is 13%. Malaysia’s tax-to-GDP ratio is just 11% while the average for Organisation of Economic Cooperation and Development (OECD) countries is 33%,” said Tengku Zafrul.

“As such, although our economy is improving this year (expected GDP of 5%), we cannot take on more debt.”

The minister was responding to Ahmad Maslan (Pontian-BN) who asked if the government will be borrowing more money to finance the hefty subsidies bill this year. – July 19, 2022.