KUALA LUMPUR, June 11 — Prime Minister Tun Dr Mahathir Mohamad sought today to allay fears that the country may become bankrupt under the Pakatan Harapan (PH) government.
He asserted that the country has learnt its lessons from the 1997 financial crisis, adding that there are “huge savings” from several government institutions, notably the Employees Provident Fund (EPF), which can be used to help the economy recover in the event of crisis.
“I don’t think under this government, the country will slide into bankruptcy,” he said in a news conference broadcast live from Tokyo, Japan where he is attending the Future of Asia conference hosted by Nikkei.
Dr Mahathir was replying a question on whether Malaysia might slip into a financial crisis over the RM1 trillion debt and liabilities.
“Had the previous government won, there would be a slide towards bankruptcy, but Malaysia is fortunate in that it has huge savings.
“We have the Employees Provident Fund for example, which has a lot of money and many other institutions which have saved quite a lot, so that can be backing for our attempt to recover the economy,” Dr Mahathir said.
In a reminder, he said his previous administration — then under the Barisan Nasional — had weathered the 1997 crisis that enveloped many other Asian nations, and that the current PH administration will be able to cope with similar challenges that may crop up in future.
“As you know in 1997, we had a very terrible financial crisis, and we got out of that.
“We feel that we know something about the finance of a country, which would enable us to claw back and retain and regain our financial strength as it was before,” Dr Mahathir added.
Last month, Finance Minister Lim Guan Eng revealed that Malaysia is saddled with over RM1 trillion in debt.
The announcement rocked the local stock exchange, which then saw 14 days of continued capital outflows.
However, Dr Mahathir in an interview later, claimed that he has found ways to wipe out almost RM200 billion of the country’s RM1 trillion of debt and liabilities, and that he is working with PH to mitigate the debt.
He has previously said that Malaysia’s total debt and liabilities have crossed RM1 trillion when combined with off-balance sheet items such as contingent liabilities and lease payments for Public Private Partnership (PPP) projects, or 80.3 per cent of the Gross Domestic Product (GDP).