Thursday, December 8, 2011

3Q 2011 Government Debt Update

Net government borrowing in 3Q 2011 fell to its lowest level in 3 years (RM millions):


If you add in foreign borrowing as well, 3Q 2011 marks the first time since 2007 that the government actually reduced its overall debt level.

It still looks pretty big though (RM millions):


We’re still on pace to hit nearly half a trillion Ringgit by the end of next year.

Scaled to the population, the current debt level works out to about RM15,400 per person:


This actually isn’t as bad as it looks. When you factor in inflation, government debt per capita has actually dropped slightly (RM; CPI inflation 2000=100):


Debt per capita hasn’t move much throughout 2011, remaining just below RM12,000 in 2000 Ringgit terms.

The even better news is that the debt to income ratio has now dropped two quarters in a row based on my 4-quarter rolling GDP measure:


This is the lowest reading since 3Q 2009 – though that’s not saying much. But it does appear as if government debt will stabilise at around this level – next year’s planned deficit reduction won’t affect this ratio very much, unless there’s faster than expected growth.

Technical Notes:

Government debt data from BNM’s October 2011 Monthly Statistical Bulletin

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