Mahathir Seeks to Cut National Debt of 65% of GDP

Malaysia will try to cut its national debt of one trillion ringgit ($251.67 billion), some 65% of GDP, by aborting or reconsidering some projects and cutting ministers’ salaries, Prime Minister Mahathir Mohamad said on Wednesday.

Mahathir, 92, led an opposition coalition to a shock victory in elections this month after campaigning on rising living costs and a promise to clean up corruption at the highest levels of government, Reuters reported.

Mahathir said the national debt of Southeast Asia’s third-largest economy was 65% of GDP, and earlier this week blamed abuses by the previous government, led by the ousted premier Najib Razak, for the ballooning figure.

“I’ve been informed that our debt is actually one trillion ringgit, but today we were able to study and look for ways to reduce this debt,” he said at a press conference.

Mahathir added that cabinet ministers’ salaries would be cut by 10% and that his government would decide “very soon” on whether to continue with the Singapore-Kuala Lumpur high speed rail project.

“This will be managed by the finance minister and in our downsizing process, no one with lower salaries will be affected,” he added.

Najib has said previously the national debt was below his government’s self-imposed ceiling of 55% of GDP. But Mahathir has said many of the figures recording the country’s financial position may be false.

 Public Deceived

Najib faces a graft probe into a multi-billion dollar scandal at state fund 1Malaysia Development Berhad. Since his electoral defeat, authorities have searched properties owned by Najib and his wife, Rosmah Mansor, and seized cash and items, including jewelry and luxury handbags, estimated to be worth millions of dollars. Najib denies wrongdoing.

Malaysia’s previous government deceived the public and parliament over the country’s financial situation and state fund 1MDB, the new government’s finance minister said on Tuesday. The previous government has been bailing out debt-burdened 1MDB since April 2017, paying a total of 6.98 billion ringgit ($1.8 billion) so far, Lim Guan Eng said.

That includes interest and coupon payments, and a 5.05 billion ringgit settlement payment made to Abu Dhabi fund IPIC, Lim said.

Mahathir also said he would review the search by a US firm for Malaysia Airlines Flight MH370 which disappeared on its way from Kuala Lumpur to Beijing on March 8, 2014, with 239 people on board, in one of the world’s biggest aviation mysteries.