The Evolving National Debt Ceiling: Does Malaysia Need A Fiscal Responsibility Act?

National economic policies and politics can be quite difficult to understand, here we have blogger Pure Shiite breaking down the current national debt issue and asks whether we need a new law to regulate it.

If you are economically inclined, Pure Shiite's articles are usually very well researched and relatively easy to understand.

Here is an excerpt from his article:

The national debt level is governed by various acts of parliament that impose a debt ceiling for the government. In accordance with Act 637 Loan (Local) Act 1959 (revised 2004) and Act 275 Government Investment Act 1983, the combined loans raised locally should not exceed a ceiling of 55% of the nation’s GDP.

Act 403 External Loans Act 1963 (revised 1989) limits the external loans exposure to RM35 billion at any particular time.

On top of the debt ceiling imposed by the acts, the national treasury also follows strict guidelines to strengthen the fiscal discipline, even before my tenure as the Finance Minister.

For example, the proposed operational budget for a particular year should never exceed the revenue projection.