Tuesday, March 20, 2012
  • Tun Dr Mahathir Mohamad
"If the Government cannot approve the demand it must be because it does not want to bankrupt the nation." (Photo by Hussein Shahruddin/The Mole)

Tun Dr Mahathir Mohamad on the realities of money and the dangers of debt:


Once upon a time when I was Prime Minister I had the responsibility of approving the budget before it was presented to Parliament.


Roughly I knew I had to make provision for operation, for debt servicing and for development.  Despite allegedly being profligate, I managed not to overspend.  In fact the reason why we did not go down during the financial crisis was because we had no big debts to pay.


Of the three elements of the Government budget, only development spending can be reduced.  Debt servicing and operations (salaries, pensions and other statutory expenditure must be paid on time if we are not going to default).  If we increase salaries too much, and we have more than a million Government employees, there is a likelihood that we will not have enough for even minimal development.


We may announce a big development budget but there will simply be not enough money to implement them.


We may borrow.  But there is a limit to borrowing.  When you borrow the debt servicing charges will increase.  A point will be reached when we will not be able to service debts or pay the lender when the loans become mature.


All these elementary things must be known to the Government.  So we will not become like Greece. But people do not seem to know about this. Demands for pay increases, for higher non-taxable pensions, for abolition of tolls ( the Government has to make up for the loss of revenue by toll concessionairs), more holidays, more subsidies etc will continue to be made.


The opposition, wishing to become popular and win elections will always support these demands. Not having to be responsible for the overspending and the possible bankruptcy of the nation, it is easy for them to support. I hope the people will see through their lack of a sense of responsibility to the nation.


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