Malaysiakini News

Of Lannisters, Greece, and paying our country's debts

Vinodh Pillai  |  Published:  |  Modified:

COMMENT | Having just finished work, the last thing I wanted to talk about was the state of the country – or to be specific, the "hot topic" all Malaysians speak of, the 1MDB scandal.

"But you want to be a journalist, don't you?" my dinner partner asked. "You should know about these things. What happened with 1MDB's late payments?"

A couple of weeks prior to our dinner, 1MDB had made a payment worth US$350 million to the International Petroleum Investment Company (IPIC) on Aug 12.

This is, of course, after they had missed the first deadline, and were given a grace period of five days to pay their debts with interest.

I monotonously narrated this to my friend in between spoonfuls of pan mee. He looked at me dumbfounded.

"Don't you know what this means? If the government can no longer pay their debts on time, it means we are going bankrupt!" he said with shock.

I rolled my eyes at this.

Having grown up with friends and family who would always joke about the state our country was heading towards, I had heard this conclusion one too many times.

The "Game of Thrones" season 7 finale had just been aired, so I joked, "The Lannisters always repay their debts, don't they?"

My friend slammed his drink on the table and said, "Vinodh, Najib is not Cersei Lannister, and this is not Westeros. We are becoming like Greece!"

The Greek debt crisis

Greece became the centre of attention after an investment bank in Wall Street imploded in 2008.

The US Federal Reserve had taken steps to prevent a major meltdown of the global banking system after that, but it seems Greece was not spared.

"What in the world has Greece got to do with this? We haven't been locked out of the markets," I asked, with my limited knowledge of how the financial world operates.

Greece announced in October 2009 that it had been understating its deficit figures for years. By 2010, Greece was headed towards bankruptcy after it was shut out from borrowing in the financial markets.

"What do you think IPIC is?" my friend asked. "It's the 'bank' the Malaysian government borrows money from, and what do you think happens when you can't pay back your debts?" he asked.

As early as 2016, columnists had been warning that "signs were clear" Malaysians would have to brave for austerity measures similar to those imposed in Greece.

Almost a year has passed since. Surely the government wouldn't impose austerity measures now, I wondered.

"So let's say you're right and we are bankrupt. What happens now?" I asked...

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