Higher debt is temporary and manageable, says Bank Negara

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The plan to increase the country's statutory debt limit to 60 percent of the gross domestic product (GDP) from 55 per cent is temporary and can be managed by the government. Bank Negara Malaysia governor Nor Shamsiah Mohd Yunus said increasing the debt level during a crisis is not something new as Malaysia has done it before. To recap, Malaysia’s debt-to-GDP ratio was 80.7 percent in 1990 before falling to 31.8 percent in 1997. It then rose to 41.4 percent in 2001 and increased to 52.8 percent in 2009 and the ratio had remained above 50 percent from 2009 to 2018. “The increase is temporary, and the bank and government do have the capacity. Our interest rates have come down, borrowings are now much cheaper so the impact on the debt-servicing ratio is also going to be much less,” she added. Malaysia, she said has never had a problem in servicing its debts, which are mainly in rin…