Malaysia Taps Public Euphoria to Reduce Nation's Debt Burden

(Bloomberg) -- Malaysia is tapping public euphoria to raise funds and reduce the country’s 1 trillion-ringgit ($251 billion) debt burden, after a shock election victory this month toppled the previous government.

The finance ministry set up Tabung Harapan, or the Hope Fund, for citizens who were eager to contribute after the government said Malaysia’s debt was higher than previously disclosed by the previous administration. Prime Minister Mahathir Mohamad has scrapped multibillion-dollar projects, cut ministerial salaries and dismissed thousands of contract workers to shore up the budget.

“There are signs of awareness from the people to lend their support to the government,” Finance Minister Lim Guan Eng said in a press statement on Wednesday. “The people voluntarily want to share their earnings with the government to help ease the burden.”

Former Prime Minister Najib Razak was ousted in an election on May 9 that ended his party’s six-decade rule amid allegations of corruption and discontent over rising living costs.

Malaysians wouldn’t be the first to pool their money to support the state budget, with Thais and South Koreans having done so during the Asian financial crisis in 1998, when housewives and men queued up to donate their wealth.

Lawmakers earlier told the people to hold off from contributing money to any unauthorized campaigns until they hear from the cabinet.

--With assistance from Anisah Shukry.

To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

To contact the editors responsible for this story: Yudith Ho at yho35@bloomberg.net, Shamim Adam

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