A woman walks along the Saloma Link Bridge in Kuala Lumpur on July 3, 2020. ( AFP / Mohd Rasfan)

Posts falsely claim 'Malaysia has the second largest debt in Asia after Sri Lanka'

Copyright AFP 2017-2022. All rights reserved.
 

Facebook posts shared hundreds of times claim the International Monetary Fund (IMF) warned that Malaysia has the "second largest debt in Asia after Sri Lanka". However, the claims are false; the organisation has never issued such a statement about the Southeast Asian country. Malaysia's debt is also not the second largest in Asia.

The claim was posted on Facebook here on July 11, 2022, where it has been shared more than 390 times.

The post includes a screenshot from a website called Worlddebtclocks.com, which appears to show the national debt of Malaysia exceeding 696.8 billion Malaysian ringgit ($172.2 billion). 

The post's caption reads: "International Monetary Fund (IMF) has warned that Malaysia is in a huge economic dilemma. The second largest debt country in Asia after Sri Lanka is Malaysia."

A link to the debt clock site is included.

Screenshot of the misleading post, taken on July 26, 2022

The claim circulated following the fall of Sri Lanka’s previous government on July 9, 2022 after the country’s economic crisis triggered protests and caused 22 million people to face months of lengthy blackouts, record inflation and shortages of food, fuel and petrol, AFP reported here.  

The claim has been shared more than 200 times after it also appeared here, here and here on Facebook.

The claim, however, is false.

As of August 12, 2022, a keyword search on Google here found no official reports or credible news coverage of the IMF warning Malaysia of a debt crisis.

No debt crisis

A search on the IMF website here did not find any mention of concern for Malaysia's debt levels.

A press release from the organisation about its work in Malaysia, published on April 28, 2022, projected the country's economy would be "solid in the medium term", with a 5.75 percent rise driven by both external and domestic demand as Covid-19 related restrictions have been largely lifted and a high vaccination rate.

However, the IMF also noted the pandemic could lead to "permanent GDP losses" and that economic recovery was uneven, with more risks brought on by the continued pandemic and war in Ukraine.

Malaysia's Finance Minister Zafrul Aziz took to Facebook to debunk the claim, posting here and here on July 15, 2022.

The Malay-language caption of his first post, which includes a screenshot of a false post, reads in part: "The IMF HAS NEVER stated that Malaysia is experiencing economic problems, instead they are confident in Malaysia's economic growth prospects.

"Recently, the IMF has expressed confidence that the country's gross domestic product (GDP) will grow at a rate of 5.75% this year."

Zafrul further wrote that many Asian countries had a higher debt-to-GDP ratio -- the proportion of a country's debt compared to its GDP -- than Malaysia, including Japan at 263.1 percent and Singapore at 132.8 percent. 

Sri Lanka's stood at 107.2 per cent, while Malaysia's was only 63.4 percent.

Below is an IMF chart showing the central government debt of the four countries until 2020:   

( Global Debt (December 2021) / IMF)

Malaysia's official debt figures are higher than the number shown in the misleading post. 

Malaysia's national debt reached 979.8 billion Malaysian ringgit, or 63.4% of the GDP, at the end of 2021, the country's finance ministry told the parliament in March 2022.

The debt rose to 1.045 trillion Malaysian ringgit, or 63.8% of the GDP, at the end of June 2022, the ministry said on July 21. 

Sian Fenner, lead economist at independent global advisory firm Oxford Economics, told AFP that a range of different metrics are used to determine whether a country is able to pay off its debt and if its debt levels are sustainable.

According to Fenner, factors that could cause a credit rating downgrade include: public debt percentage of GDP; the amount of external debt compared to domestic debt, as those in foreign currencies could leave an economy vulnerable if there is a turn in foreign investor sentiment; and the ratio of foreign reserves to imports.

"It is worth noting that the large fiscal stimulus programs implemented [in Malaysia] since 2020 were necessary to cushion the impact of the pandemic and now support the recovery. But it has led to a rise in debt levels. Malaysia’s debt servicing cost to revenue ratio has also risen," she said.

However, Malaysia's strong growth prospects and higher oil prices reduce the risk of a credit rating downgrade, while the country is also in a strong position to continue servicing its debt, Fenner said.

Global credit rating agencies including Moody's, Fitch Ratings and S&P Global Ratings all state Malaysia's economy remains stable.

Malaysia's national debt is not the second highest in Asia.

Publicly available data shows that Japan and China have debts totalling trillions of dollars compared to Malaysia's billions.