Malaysia could face bankruptcy like Greece if 1MDB defaults: Mahathir

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Counting ringgitJust ahead of the important polls in Malaysia’s largest state of Sarawak on May 7, the country’s former prime minister and staunch opponent of current premier Najib Razak, Mahathir Mohamad, on May 5 warned that the entire nation could go bankrupt in case government fund 1Malaysia Development Berhad, or 1MDB, defaults on its bond repayments.

“The government will have financial deficits which may lead to bankruptcy if the [1MDB] loans are not serviced and the principal paid,” Mahathir stated in an article in the Malaysia Chronicle.

He added that any defaults by the government-owned company would affect Malaysia’s credit worthiness “and the government may not be able to borrow any more in the market… the sum is so huge that if the government cannot pay them it could be bankrupted. This has happened to Greece,” he wrote.

1MDB’s debt is set to be around $11 billion, but tehe fund sold off some engery assets recently.

On May 4, the board of directors of 1MDB resigned and the government took over the state funds’ remaining assets. The ministry said in a statement the ownership in 1MDB’s subsidiaries and four land assets would be transferred to it.

Mahathir’s statement came only days after Malaysia”s finance ministry (also led by Razak who is finance minister) admitted that the country’s national household debt to GDP ratio in 2015 stood at 89.1 per cent, rather than at 68 per cent as announced earlier. That makes it one of the most indebted countries in Asia.

The government-to-debt ratio of Malaysia is currently 54 per cent. See the debt clock here.

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Reading Time: 1 minute

Just ahead of the important polls in Malaysia’s largest state of Sarawak on May 7, the country’s former prime minister and staunch opponent of current premier Najib Razak, Mahathir Mohamad, on May 5 warned that the entire nation could go bankrupt in case government fund 1Malaysia Development Berhad, or 1MDB, defaults on its bond repayments.

Reading Time: 1 minute

Counting ringgitJust ahead of the important polls in Malaysia’s largest state of Sarawak on May 7, the country’s former prime minister and staunch opponent of current premier Najib Razak, Mahathir Mohamad, on May 5 warned that the entire nation could go bankrupt in case government fund 1Malaysia Development Berhad, or 1MDB, defaults on its bond repayments.

“The government will have financial deficits which may lead to bankruptcy if the [1MDB] loans are not serviced and the principal paid,” Mahathir stated in an article in the Malaysia Chronicle.

He added that any defaults by the government-owned company would affect Malaysia’s credit worthiness “and the government may not be able to borrow any more in the market… the sum is so huge that if the government cannot pay them it could be bankrupted. This has happened to Greece,” he wrote.

1MDB’s debt is set to be around $11 billion, but tehe fund sold off some engery assets recently.

On May 4, the board of directors of 1MDB resigned and the government took over the state funds’ remaining assets. The ministry said in a statement the ownership in 1MDB’s subsidiaries and four land assets would be transferred to it.

Mahathir’s statement came only days after Malaysia”s finance ministry (also led by Razak who is finance minister) admitted that the country’s national household debt to GDP ratio in 2015 stood at 89.1 per cent, rather than at 68 per cent as announced earlier. That makes it one of the most indebted countries in Asia.

The government-to-debt ratio of Malaysia is currently 54 per cent. See the debt clock here.

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