Swings and roundabout is a British idiom to mean "losses, setbacks, or negative aspects of a certain situation are cancelled out or balanced by equally advantageous or positive elements (or vice versa)".
The election is over and PH has won. The advantage or positive outcome from the use of the bankruptcy - truly or falsely, has worn out.
The attempt of Lim Guan Eng to continue with the same propaganda line to claim country's debt as RM1 trillion could cancel out the advantage they have gain.
This blog have been calling the propaganda or fake news or such political drama as wayang. Coincidently, a commentator with nicname, Anti Wayang viral the following comment.
Who will declare Malaysia as bankrupt?
Tun Mahathir said today that Malaysia could be declared as bankrupt as our national debt is at critical state. How true is this and who will declare us as bankrupt?
1. Our national debt remains at RM680 billion - not RM1 trillion. The RM1 trillion includes contingent liability of RM200b and another RM150b of committed lease payments - both of which is never counted as debt by any other country in the world.
2. At RM680 billion, our debt is just 50.8% of GDP. And even at the misleading RM1 trillion level, we are still at 80% of GDP. Many countries' official debt such as Singapore, Japan, USA, UK have levels higher than us and are still not bankrupt. Actually, Malaysia itself has had the official national debt as high as 103.4% in the 1980s and above 80% even in the 1990s and we also did not go bankrupt then. So, saying we will go bankrupt at 50% or 80% is completely untrue and mere scare tactics.
3. The official RM680 billion debt is 97% denominated in Ringgit. Since Malaysia controls the Ringgit. Even those contingent liability and lease payments are also mostly in Ringgit. Therefore, unlike Greece, Sri Lanka and Argentina (and Malaysia in the 1980s and 1990s) which had encountered problems because their debts were in foreign currency no one can declare Malaysia bankrupt as we can theoretically create as much Ringgit as we want.
4. Malaysia does not owe any money to IMF or to the World Bank or to the Asian Development Bank. In fact, we do not owe any money to any other country or institution except for China's soft-loans. However, the term of these loans are very long term at 20 years and only at a maximum of RM60 billion so China cannot ask for full payment immediately.
Even if China ask for full payment immediately, Petronas has cash reserves of RM147 billion, BNM has cash reserves of RM120 billion (not including forex reserves of RM420 billion) and Khazanah has net assets of RM140 billion and any of these can immediately pay off the entire debt immediately.
5. If you don't want to touch Khazanah, Petronas or BNM's fund, in the worst case scenario, EPF has RM800 billion in funds right now and can easily lend RM60 billion.
Many may not know but under the EPF Act, EPF is required to invest at least 70% of its total investment in government securities (another fancy name for lending to the govt by buying govt bonds). Right now, EPF does not fulfill these requirements as less than 50% of their funds is loaned to the govt. This is how EPF makes most of its money every year by using the interest paid by the govt to then pay dividends to its members.
OKAY OKAY.. Malaysia won't go bankrupt but why is Tun Mahathir and the new government keep saying this?
Simple. Because ....
1. Politically they must say this as before GE14, they had used the scare tactics to say Malaysia is going bankrupt and needs saving. So, they cannot say our debts are under control or the previous govt (or Najib) did well - therefore, they must say our debt is as bad as possible or they will then be seen as liars.
2. They can also use this as a good excuse to explain why they cannot implement the majority of their manifesto promise (abolish all tolls, RM50 per month for households, reduce petrol price, kad peduli sihat, abolish PTPTN etc etc) as most of these promises are unrealistic and can actually destroy our govt finances and ability to run the country if it is implemented.
3. They can also use this as an excuse to cancel as many projects associated with (MRT, HSR, ECRL) so that Najib's legacy is eliminated from history. This is to prevent memories similar to how Mahathir is associated with KLCC or to Putrajaya and PLUS highway.
However, cancelling these projects will also mean our economic growth for this and the following years will go down, cause stock market outflows, piss off some of some other countries (China, Singapore) and reduce hundreds of thousands of new jobs associated with these projects but to the new govt, this is a small price to pay as long as Najib and BN's legacy is completely destroyed.In the meanwhile, PH will continue to hoodwink the public through such shallow rebranding exercises of BR1M to BHM, SPAD to APAD, and so on.
The astute foreign rating agencies, fund managers and businesses interested to do FDI will be concerned with the stability of the new government under PH.
They are concerned with the effect on the deficit as a result of implementation of PH’s manifesto such as scrapping of GST (in excess of RM45b) and abolishing tolls ( outstanding loans of RM55b).
The daily revealing of new scandals involving billions seemed meant to get back at BN and their cronies.
However, it still remain a trial by media with the outcomes to ever reach the court for trial or end with favourable judgement still unsure. Let alone to return money to the people immediately.
In the end, government spend money on investigations and lawyers make all the money. While, perception on the country decline from bad to worse and likely worst and loss of confidence will leave its indellible mark on the economy.
The new government priority should be to convince the world that there will be stability, continuity in policies and peaceful transition
Unfortunately, there is rampant firing, resignation and witch hunting at a stage the current government is still a lame duck with an incomplete cabinet line-up without critical roles of Foreign Minister and Trade Minister still not filled.
The worrying questions are: Will government deficit be at forecasted 2.8% of GDP or more?
How will the expected wider budget deficit financed with the plunging local stock, bond and commodity market, and without unproductive tapping into the reserves of Petronas, BNM, and GLCs?
Bear in mind that Malaysia still rely significantly on foreigners, if not the bulk of it, to participate in local fund raising exercise.
These are urgent and serious self-inflicted issues beseiging the country. Politics and propaganda have to stop. The ruling parties have to be serious and focus in the affair of governing.
That is unless they have to continue politicking for fear of losing the government.