Monday, February 10, 2014

Will Malaysia bankrupt by 2020?

Today is the 11th day of the Chinese New Year. I am going to spend 3 days 2 nights in Singapore on my day time career official assignment. The exchange rate between Singapore Dollar and Malaysia Ringgit is SGD1.00 = RM2.625. Malaysia Ringgit has reduced its value by more than 10% in less than a year time.
As per my previous post Singapore vs Malaysia 2, Malaysia is now facing the challenge of hyper inflation phenomenon, and personally I am pessimistic over the turnaround plan of the current ruling government in view of their track record and reputation.
One of the Malaysian economist mentioned that the power of compound effect of the deficit budget. Malaysia Government has recorded more than 15 years of deficit budget since 1999 till 2013. To turnaround the situation is not easy, any efforts that put in may not even strong enough to counter the negative impact of the compound effect that caused by the deficit budget over these years.
Will Malaysia bankrupt by 2020? My wild guess is it is unlikely, but the situation is not going to be far better than bankruptcy.

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