“When central bankers, macroeconomists, and politicians talk about the national debt, they often express it as a percent of gross domestic product (GDP) which is a measure of the total value of all goods produced in a country each year. The idea is to compare how much a country owes to how much it earns (since GDP can also be thought of as national income). The problem with this idea is that it is wrong. The government does not have access to all the national income, only the share it collects in taxes. Looked at properly, the debt problem is much worse.” – Jeffrey Dorfman – Forbes
Malaysia’s debt in safe zone, Dewan Rakyat told – Bernama
Malaysia’s debt level is still in the safe zone with a deficit of less than 4%, the Dewan Rakyat was told. Minister in the Prime Minister’s Department, Datuk Seri Abdul Wahid Omar said Malaysia has managed to reduce the deficit from 6.9% in 2009 to 3.5% in 2014. – The Malaysian Insider pic, March 26, 2015.
Malaysia’s debt level is still in the safe zone with a deficit of less than 4%, the Dewan Rakyat was told today.
Minister in the Prime Minister’s Department (JPM), Datuk Seri Abdul Wahid Omar said Malaysia managed to reduce the deficit from 6.9% in 2009 to 3.5% in 2014.
“This means that Malaysia has entered the safe zone. In terms of financial management, we are getting better,” he said when winding up debate (JPM) on the Yang di-Pertuan Agong’s opening address.
A country’s financial position is deemed to be in the safe zone if it has debt of 70%, including contingent liabilities and a deficit of less than 4%.
On the other hand, a country’s financial position is deemed critical if it has debt of over 100% of Gross Domestic Product (GDP) and deficit of over 4%.
Replying to a question from Nga Kor Ming (DAP-Taiping), Abdul Wahid said the government would ensure the country’s debt remain below 55% of GDP.
He was confident Malaysia would achieve developed nation status with high income by 2020 despite the challenging economic conditions.
“This will be achieved via the implementation of projects and programmes under the Tenth Malaysia Plan (2011-2015) and core strategies, including ‘game changer’ under the Eleventh Malaysia Plan (2016-2020).
“Among others, the focus will be on innovation and productivity to improve competitiveness and ensure sustainable growth.”
Abdul Wahid said besides measuring the status of developed countries in terms of economic performance, human capital development will also be emphasised. – Bernama, March 26, 2015.
“Measuring the national debt as a percent of GDP may be a common international norm, but it makes little sense since not all national income is collected in taxes. Looking at debt to government tax revenue, more akin to a family’s comparison of its debt to its income, the story of our national debt becomes much scarier.” – Forbes