US national debt hits record $37 trillion amid mounting fiscal concerns

Photo taken on March 17, 2020 shows U.S. dollar banknotes in Washington, DC, the United States. Photo:XinhuaThe US government's gross national debt has surpassed $37 trillion, a record number that highlights the accelerating debt on America's balance sheet and increased cost pressures on taxpayers, the AP reported. The $37 trillion update is found in the latest Treasury Department report issued on Tuesday, which logs the nation's daily finances, according to the AP report.

Experts said that as the debt scale grows larger, future interest payment costs will continue to rise, posing risks to fiscal sustainability, while global investors may grow wary of US Treasury bonds amid credit downgrades and uncertainty.

The $37 trillion debt milestone comes less than eight months after the nation hit the $36 trillion threshold for the first time in late November 2024, and a little over one year after the $35 trillion mark was reached in late July 2024, Fox Business reported.

The $37 trillion debt amounts to about $280,000 per household or $108,000 per person, according to the Peter G. Peterson Foundation.
 
The national debt soaring past $37 trillion sends yet another clear message about America's unsustainable fiscal path, Chair and CEO of the Peter G. Peterson Foundation Michael Peterson said in a statement on its website.

"Our growing debt slowly damages our economy and the prospects of the next generation. As the government borrows trillion after trillion, it puts upward pressure on interest rates, adding costs for everyone and reducing private sector investment. Within the federal budget, the debt crowds out important priorities and creates a damaging cycle of more borrowing, more interest costs, and even more borrowing," Peterson said.
 
The Government Accountability Office outlines some of the impacts of rising government debt on Americans — including higher borrowing costs for things like mortgages and cars, lower wages from businesses having less money available to invest, and more expensive goods and services, according to the AP.
 
The Joint Economic Committee estimates at the current average daily rate of growth, an increase of another trillion dollars in the debt would be reached in approximately 173 days, according to the AP.

Peterson warned that "As our debt continues to rise, at some point the financial markets will lose confidence in our ability to overcome the politics to solve this problem."
 
To repay maturing debt, the US government has been issuing new debts to repay old ones, leading to the continuous expansion of the overall debt load. As the debt scale grows larger, it means that the future interest payment costs will continue to rise, posing risks to fiscal sustainability, Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Wednesday.

If maturing debts cannot be repaid, US debt will become unsustainable, and its credit ratings may be downgraded, creating significant risks for global investors, Zhou added.

The expansion of the US government's debt scale has brought more uncertain risks to investments in US Treasury bonds, making global investors more cautious, Zhou said.

"Factors such as rating agencies' changes in sovereign credit ratings and sharp swings in US tariff policies at the real-economy level have added to this uncertainty," Zhou added.

Yang Changjiang, a professor at Fudan University, told the Global Times on Wednesday that the expanding US government debt has also brought greater uncertainty to the global financial market and the stable operation of the international monetary system.

In May, Moody's downgraded the US sovereign credit rating. It is expected that US large-scale fiscal deficits will further increase the burden of government debt and interest payments, and the fiscal situation is likely to deteriorate, Yang said.

Moody's Ratings in May cut the US' sovereign credit rating by one notch to Aa1 from Aaa.

"This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns," said a release by Moody's Ratings. 

The US fiscal performance is likely to deteriorate relative to its own past and compared with other highly rated sovereigns, according to the credit rating agency.

The downgrade means the US has lost its last triple-A credit rating from a major ratings firm, following cuts by Fitch Ratings in 2023 and S&P Global Ratings in 2011, according to Xinhua.Related:

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Landlords left to foot millions in electricity bills due to tenant's illegal crypto mining

 

In a press conference yesterday, Gopeng MP Tan Kar Hing revealed that over 30 property owners had reported the issue to their service centres, with efforts underway to gather information from more than 30 additional owners. Also present were Simpang Pulai assemblyman Wong Chai Yi, and Astaka assemblyman, Jason Ng. - Pic credit Facebook/Tan Kar Hing

Gopeng MP Tan Kar Hing (in white) mingling with the bitcoin victims during a press conference at his service centre. -Ronnie Chin/The Star

KUALA LUMPUR: More than 60 shoplot owners in Ipoh are facing millions of ringgit in electricity claims after their tenants were found to be involved in illegal bitcoin mining activities.

In a press conference yesterday, Gopeng MP Tan Kar Hing revealed that over 30 property owners had reported the issue to their service centres, with efforts underway to gather information from more than 30 additional owners.

The claims range from RM30,000 to RM1.2 million per case.

Tan highlighted that these incidents exposed loopholes in the current legal framework.

"Under the Electricity Supply Act, Tenaga Nasional Bhd (TNB) bases its claims on revenue losses from electricity theft. However, the law does not require TNB to prove that the registered account holder is responsible for the theft.

"This creates a legal loophole, allowing illegal mining activities to go undetected while innocent property owners bear the financial burden," he said.

Tan also pointed out that illegal electricity connections could cause power outages, resulting in losses not only for homeowners but also for TNB and the country.

He urged the Energy Commission, under the Energy and Natural Resources Ministry and relevant enforcement agencies to take action against illegal bitcoin mining activities to prevent further crimes.

In the meantime, Tan said he would continue to raise these cases during the upcoming parliamentary session.

He also advised landlords to transfer TNB accounts into their tenants' names when renting out properties to avoid such incidents.

According to China Press, one property owner, Yen Pit Yun, said that the pressure of facing RM1.2 million in unpaid electricity bills from TNB could drive her to bankruptcy.

Yen explained that the upper floor of her two-storey shop lot in Panorama Lapangan Perdana, Simpang Pulai, was rented out to a tenant in July while she operated a hair salon on the ground floor.

"On Aug 30, I noticed the tenant carrying a large bag of thick electrical cables upstairs, which raised my suspicions and led me to file a police report. The next day, the tenant moved out unexpectedly.

"When I went upstairs to inspect the unit, I found it empty, with holes in the walls and damaged partitions, causing significant losses," she said.

She reported the incident to TNB, but two months later, she received a notice informing her of outstanding electricity bills exceeding RM1.2 million, leaving her feeling helpless.

Yen said her only hope now is the assistance of the Gopeng MP and others to resolve the debt issue.

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New Zealand may have a solution for world’s debt

Quick fix: Pedestrians walk past a Moore Wilson & Co supermarket in Wellington. The success of New Zealand’s reforms are reflected in its fiscal performance, says Ball. — Bloomberg

WELLINGTON: In the early 1980s, New Zealand was on the brink of economic collapse.

Two oil price shocks had saddled the country with high inflation, and the United Kingdom’s decision to join the European Economic Community a decade earlier had cut off access to a key export market.

Successive governments had compounded the pain with a series of policy errors – throwing around subsidies, awarding inflationary pay deals and trying to control prices, while keeping interest rates too low and taxes too high.

The result was soaring unemployment and mounting debts.

No wonder some dubbed New Zealand the Albania of the South Pacific.

Yet over the remainder of that decade, New Zealand was transformed into one of the most prosperous countries in the world.

A new Labour government took office in 1984 and embarked on a form of shock therapy that came to be known as “Rogernomics” after Finance Minister Roger Douglas.

The government removed exchange controls, slashed subsidies, privatised services and handed responsibility for setting interest rates to a newly independent central bank.

New Zealand also introduced a different accounting approach throughout the public administration.

It is impossible to separate out the precise impact of each of these policies.

But Ian Ball, a former senior Treasury official, professor of public finance management at Victoria University in Wellington, and one of the authors of Public Net Worth (Palgrave Macmillan, February 2024), says accounting reform was among the most consequential.

Accounting is notoriously dry stuff. But switching to an accruals-based approach used in the private sector, and away from the cash-based systems traditionally used by governments, forced departments to think long-term and maximise the efficient use of assets.

This is especially relevant in the United Kingdom at the moment with the government on the cusp of major budget reform.

To see what this means in practice, take the case of public sector pensions.

Under a cash-based system, the debt is accounted for when the pension is paid, which could be years in the future.

The government has little incentive to make any provision for it.

But with accrual-based accounting, the cost of the pension commitment must be recorded as a liability when the benefit is earned.

That led the New Zealand government in 2001 to establish a Superannuation Fund to pay for future pensions.

Today, this quasi-sovereign wealth fund is regarded with jealousy by countries that wish they had something similar.

Take another example: Under an accruals-based system, the budget includes a charge each year to reflect the fact assets such as buildings and infrastructure deteriorate and eventually become obsolete.

This is what accountants call depreciation.

Because the cost runs through annual budgets, there is a strong incentive for governments to enhance the value of their assets by managing them efficiently.

Under a cash-based system, there is no such incentive, meaning long-term investment is deferred, and future generations are left to pick up the bill when buildings fall into disrepair and the infrastructure crumbles.

The success of New Zealand’s reforms are reflected in its fiscal performance, says Ball.

“What you see is a very significant change.

“We had had two decades of deficits before these reforms, but once they were in effect, from around 1994, we had basically a trend of strengthening the balance sheet and increasing net worth.

“And as you strengthen the balance sheet, you have the effect of reducing debt too.”

With the exception of the four years after the global financial crisis and the devastating Christchurch earthquake in 2011, which caused damage equivalent to 11% of gross domestic product (GDP), net worth grew every year until the pandemic.

Ball is on a mission to export New Zealand’s experience.

In collaboration with colleagues from around the world, including a historian, a banker, a former UK Treasury official and the former global chief economist at Citigroup Inc, he has written Public Net Worth to explain how this approach could be the answer to the one of the biggest challenges facing almost every government today:

How to tackle excessive public debt, particularly at a time when ageing populations, geopolitical tensions, geoeconomic fragmentation and the costs of combating climate change add to fiscal pressures.

US public debt is close to 100% of GDP and is projected to rise to 122% by 2034.

Many eurozone countries are struggling to bring debts and deficits under control to comply with single currency rules. The situation in many developing countries is even more stark.

Indeed, economists from the International Monetary Fund (IMF) have warned that global public debt may be higher than previously known and getting worse, and that countries will have to make much more significant fiscal adjustments to deal with the problem.

According to the IMF’s latest estimates, global public debt will exceed US$100 trillion by the end of this year, equal to about 93% of global GDP.

Against such a backdrop, the authors argue that accrual-based accounting could improve public sector productivity, helping ease the pressure on cash-strapped governments.

For example, they reckon governments could make easy gains through better management of their public property.

Cash-based accounting values property based on what you paid for it, less depreciation, with no reference to the current market value.

But without up-to-date valuations of assets, government decision-making takes place in the dark.

Should a building be renovated or sold?

How much should the state charge for its services?

A road network, for example, is a valuable public asset.

But in a cash-based system, there is no incentive to generate money from it, whether via tolls or road-pricing or some other mechanism.

In New Zealand, says Ball, one of the early exercises was to work out an appropriate capital charge for public services.

Armed with that information, the government could then decide who was best placed to deliver them: the state or the private sector.

As the old saying goes, what you can’t measure you can’t manage. — Bloomberg

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Should we be worried about debt?

 According to Bank Negara’s Financial Stability Review report for the first half of 2021, Malaysia’s household debt to GDP has declined to 89.6% from 93.2% as at end of last year. Although a small achievement,the household debt level remains elevated.

With a current debt-to-gdp of about 125%, the US is not the only country with a huge mountain of debts.

IN recent weeks, global markets were roiled by the mere mention of a four-letter word, debt. From China’s Evergrande Group’s near collapse, as it sat on a mountain of liabilities, to the United States government’s need to raise its debt ceiling.

In Malaysia’s case, we too have not much choice either but to raise our debt ceiling as we look at ways to re-generate the economy with a higher debt room of 65% of gross domestic product (GDP) from 60% currently.

It seems like debt has become one dirty word for investors for the time being, as we all know there is a price to pay when it comes to debt as there is no such thing as a free lunch.

For the US, there is no doubt that they have constantly raised their debt ceiling over the years to ensure they do not default on their obligations.

According to the US Treasury website, since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the nation’s debt limit.

Currently suspended, the US debt ceiling was reset on Aug 1, 2021, to US$28.4 trillion (RM118.9 trillion). For the US, failure is not an option as it will lead to a catastrophic chain reaction to not only the financial market but to the economy as a whole.

According to Treasury Secretary and the former Federal Reserve (Fed) chairperson, Janet Yellen, (pic) the US has never defaulted on its debt before and she was “confident” that the issue would be addressed, despite warning the Congress that the deadline for the debt ceiling is “around Oct 18”.

According to Treasury Secretary and the former Federal Reserve (Fed) chairperson, Janet Yellen, the US has never defaulted on its debt before and she was “confident” that the issue would be addressed, despite warning the Congress that the deadline for the debt ceiling is “around Oct 18”.

For now, while a nine-week stopgap funding bill has been endorsed by the President on Thursday, which in all likelihood will avoid a government shutdown at least up to Dec 3, 2021, the threat of a US defaulting on its debts remains.

While the US is able to continue to print money by simply passing the law to keep borrowing, the US, just like any other country, cannot go on borrowing forever. With a greater supply of money, sooner or later, interest rates will have to rise as the increase in money supply will likely fuel inflation.

After all, the Fed too expects rates to start rising in 2022 and much more in 2023 onwards.

In the last Federal Open Market Committee just over a week ago, the 10-year and 30-year US benchmark rates have already moved 17 basis points (bps) and 21 bps to 1.50% and 2.06% respectively – as the market begins to price in expectations of the Fed’s tapering move as well as worries if there is going to be lengthy impasse between the Democrats and the Republican or grand old party (GOP) to raise the debt ceiling.

Having said that, as the US has been running budget deficits for the longest time, it would not be too far-fetched to assume that given time, the US will need to raise the debt ceiling yet again in the future.

Hence it was also of no surprise when Yellen commented on Thursday that the debt ceiling ought to be permanently abolished.

In any government’s financial management, it’s either shortfall or revenue, mainly due to inadequate tax collections or excessive spending, which are also a function of debt service charges, and to a certain extent, over-priced development spending or operating expenditures.

With a current debt-to-gdp of about 125%, the US is not the only country with a huge mountain of debts.

So is the rest of the world. In fact, according to the Institute of International Finance (IIF) in its Global Debt Monitor report published on Sept 14, 2021, global debt, which includes government, household and corporate, and bank debt increased by US$4.8 trillion (RM20 trillion) to reach a new alltime high of US$296 trillion (RM1.24 quadrillion).

In essence, over the past six quarters, as the pandemic has caused significant damage to the global economy and unprecedented response from governments, total global debt has expanded by US$36 trillion (RM150.7 trillion) or 13.6% from just about US$260 trillion (RM1.09 quadrillion) as at end of 2019.

Money has to go somewhere

When a debt is raised, be it by the government, a company, or a household, it has to go somewhere. For most governments, debts are mainly raised for development expenditure, and if it is allowed by the constitution, on operating expenditure too.

Debts raised due to the pandemic perhaps has become the norm globally as well, as the government has no choice but to raise the required funding to support the economy.

In the US, the Fed also buys US treasuries and agency mortgage-backed securities and this effectively makes its way into the financial markets.

So while the Fed has expanded its balance sheet by more than 100% since the pandemic, the liquidity it has provided has caused significant gain not only in traditional asset classes but into everything else. Home prices are rising, commodities have boomed and markets are buoyant and cryptos have soared.

In the case of Evergrande Group, many are left wondering if it was a case of a “too-big-to-fail” company. Evergrande became a property developer largely by borrowing.

As a group, they also ventured into other businesses, which among others include electric vehicles, Internet and media production, theme park, football club, and even into mineral water and food production.

Evergrande’s massive business empire, grown out of debt means, while it has substantial assets, it also had huge liabilities. As Beijing has been strong in putting its house in order in the form of new regulations and guidelines for many industries, Evergrande too was not spared.

As early as August last year, the Chinese government had introduced a “three red lines” test for developers to meet if they wanted to borrow more.

This was firstly, liability to asset ratio of not more than 70%; secondly, net debt to equity ratio of not more than 100%; and thirdly cash to short-term debt ratio of more than 1.0.

Hence, the writings were already on the wall on Chinese developers more than a year ago that the regulators were serious in addressing debt-driven growth pursued by these companies. In Evergrande’s case, the debt hit the ceiling.

Why do we go into debt?

Debts taken by individuals are rather straightforward. Of course, there are good debts and bad debts. For most of us, it is for the purchase of big-ticket items like a roof over the head, and for mobility purposes, where most of us own a car.

Of course, we also indulge ourselves with material stuff, either from our savings or credit cards that we will pay off when the time comes. Some of us, due to lack of income or due to financial mismanagement, take on bad debts and that’s where the trouble starts as we are unaware of the consequences of rising personal debts and high-interest cost.

Stories of debts owed to money lenders are common within our society while Bank Negara statistics also show that one of the fastest-growing debt profiles among individuals is personal loans.

This has remained relatively high and has increased by 87.4% over the last five years alone to about Rm73.7bil as at end of August 2021, while its share of the banking system loans outstanding has increased from 2.7% to as much as 4.0% now. 

 

According to Bank Negara’s Financial Stability Review report for the first half of 2021, Malaysia’s household debt to GDP has declined to 89.6% from 93.2% as at end of last year. Although a small achievement, the household debt level remains elevated. For a company, debts should be part of capital management as companies need to not only sustain their business operations but look at opportunities to grow and expand their market share, either via acquisition or via borrowings. However, similar to what we have seen in Evergrande’s case, companies too must observe their own “three-red-lines” to ensure they have the right mix and remain vigilant of its exposure.

Does Malaysia have the room to borrow more?

For Malaysia, with a higher debt ceiling of 65%, the government is effectively allowing itself to have some headway to borrow an additional Rm75bil to support the recovery momentum that most economists now expect will be much stronger in this fourth quarter period and 2022 and as we prepare ourselves for the post-pandemic period.

While we have created this room to enable us to borrow more, we must be mindful to borrow responsibly as debts that are taken today will be borne by future generations.

We also need to chart our way out of this debt-dependency black hole that we have been in since the Asian Financial Crisis of 1998 and get out of this conundrum.

While debt-to-gdp is just a denominator that is divided by a numerator that is steadily growing, we must find ways to manage our overall federal government debt and plan to reduce them post-pandemic.

That is a whole new topic altogether, and next week, this column will explore strategies that Malaysia can deploy to reduce its debt dependency.

  PANKAJ C. KUMAR Pankaj C Kumar is a long-time investment analyst. The views expressed here are his own.   Source link

 

 US federal debt crisis uglier than Evergrande trouble

 

 

 

 There is much buzz amongst global investors recently about two possible debt defaults, though they are of different proportions in their would-be impact on global equity markets. One is the US federal government's rivers of borrowed money running dry and in urgent need of replenishing. The other is a major Chinese property developer which has run into financial trouble, because the company veered off the road by squandering too much on making electric cars and sponsoring a football club.

As US federal debt default looms, US Treasury Secretary Janet Yellen is facing her biggest test in her eight-month tenure to convince reluctant Republican lawmakers to agree to raise the US' national debt limit, which is currently set at $28.5 trillion. The stakes are high, because if Yellen's effort fails, the US financial system will collapse.

Yellen has called Republican leaders to convey the economic danger which lays ahead, bluntly warning that the Treasury Department's ability to stave off default is limited, and the failure to lift the debt cap by late October would be "catastrophic" for the country and the world.

Six former US treasury secretaries last week sent a letter to top US lawmakers, warning them a default would roil financial markets and blunt economic growth. According to US media reports, Yellen last week also warned the nation's largest banks and financial institutions about the very real risk of a default. She has spoken to chief executives of JPMorgan Chase, Bank of America, BlackRock and Goldman Sachs, briefing them the likely disastrous impact a federal default will produce.

To make things worse, both Democrats and Republicans in the US are at each other's throats now over US President Joe Biden's new $3.5 trillion spending bill, which proposes heavy tax raises on rich families and corporations, and has met fierce opposition from Republican lawmakers. Whether they will compromise on the debt limit, by making a last-minute deal with the White House to reduce Biden's giant spending plan remains to be seen.

Market analysts say if the US government defaults on its colossal debt, a financial system crisis of a magnitude larger than the 2008-09 debacle could occur, which is estimated to lead to an evaporation of $15 trillion in wealth and loss of 6 million jobs in the US. The capital market is now on tenterhooks facing a potential financial time bomb.

Last week, the US' major media outlets also focused their reportage on a possible default of a leading real estate developer in South China, but by all metrics, it is a risk of much smaller scale. The case is being closely watched by China's financial authorities and will never be allowed to develop into a systemic risk.

With regard to the privately-run property developer Evergrande, many fear the knock-on effects of the company's imminent difficulty to pay back principals and interests of borrowed money, including corporate bonds and bank loans. But, even if the city of Shenzhen with its deep pockets, where the company is headquartered, refuses to bail out Evergrande, one bankrupt company can hardly impact the stability of China's financial system, and the risks linked to this possibility have been widely overblown by a hyperventilating media.

Executives at Evergrande are launching a last-ditch rescue effort, trying to sell the company's electric car subsidiary and other assets in China and abroad, including the Guangzhou Evergrande Football Club. It is also selling its housing projects scattered in dozens of Chinese cities at a discount to speed up its cash flow. Whether the company is able to stave off a debt default remains unknown.

Evergrande said on Wednesday that it would make an interest payment on an onshore bonds due Thursday, but the company didn't say whether it had plans to make a $83 million coupon payment due on its US dollar bonds within a month.

The city government of Shenzhen, or the central government in Beijing, has not rushed to bail out Evergande most likely in the belief that the company itself is to blame for the predicament - too much leverage and squandering of borrowed funds ploughed into auto making and other fringe businesses and budgeting largesse. Authorities probably want the case to serve notice to investors at home and abroad, that they need to do their due diligence and enforce accountability on debtors.

However, the central government is almost certain not to tolerate a possible bankruptcy of Evergrande to spill over to draw down the broader Chinese economy, as the central bank has done numerous pressure tests since the 2008 global financial crisis, which was caused by the sub-prime housing debts in the US. Last year, the central bank required property developers to bring down their debt levels below certain thresholds before they are able to borrow more money from financial institutions. And, many Chinese commercial banks have ascertained their exposure to Evergrande is restricted.

So, debt-beleaguered Evergrande is unlikely to produce a firestorm and disrupt China's financial system. In addition, both the government and the central bank have plenty of policy tools, including easing overall monetary policy, to tide over Evergande if it goes under. But of course, the last resort is to bail it out and restructure the company, as China has done with other troubled corporations like HNA, Huarong and Baoshang Bank.

The author By Wen Sheng is an editor with the Global Times. 

 

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Malaysia's Covid-19 Situation is improving

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Experts: Situation is improving https://www.thestar.com.my/news/nation/2021/10/01/experts-situation-is-improving#.YViCsdkAaBc.twitter

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“Based on all these trends, one may conclude that the national burden of Covid-19 has decreased in recent weeks.” Prof dr Sanjay rampal

M’sians reminded to continue observing SOP in view of endemic phase

PETALING JAYA: As Covid-19 cases and hospitalisation rates taper after heightened pandemic activity in August, health experts are looking at the government’s preparations for the endemic phase.

Epidemiologist and public health physician Prof Dr Sanjay Rampal of Universiti Malaya said there was a decline in the national daily reported cases and an even more pronounced decline in the number of Covid-19 cases that were ventilated or in the intensive care unit (ICU).

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As Malaysia enters the last quarter of the year, there is a glimmer of hope that a greater semblance of ‘normalcy’ can return, even if it is a new normal. Daily cases are down from a peak of nearly 25,000 in August while usage of ICU beds remains manageable.

Epidemiologist and public health physician Prof Dr Sanjay Rampal of Universiti Malaya said there was a decline in the national daily reported cases and an even more pronounced decline in the number of Covid-19 cases that were ventilated or in the intensive care unit (ICU).

These trends correlated well with a decreasing trend of test positivity ratio, he added.

As at Sept 27, the positivity rate stood at 9.8%, a decrease from the 14.8% recorded on Sept 16, which was the highest peak from April onwards.

“Based on all these trends, one may conclude that the national burden of Covid-19 has actually drastically decreased in recent weeks,” he said when contacted.

On preparations for the endemic phase or endemicity, Prof Sanjay said that regardless of what the government did, there would still be new cases of Covid-19.

But these cases would have less of an impact on the healthcare system due to the decreased risk of complications in vaccinated people, he said.

“As we learn to coexist with the virus, we must re-adjust back to the time before interstate travel restrictions were enforced while continuing to wear a mask in congested areas, practise good hand hygiene and maintain physical distancing as best as we can.

“Movement restriction should be used as the last resort in the management of the pandemic.

“The World Health Organisation (WHO) recommends that movement restriction be implemented in high intensity for only short periods and only when the healthcare system is overwhelmed,” he added.

Prof Sanjay said that as Covid-19 became endemic, there would always be a baseline number of new cases daily but there was not enough data yet to accurately estimate this baseline number.

Universiti Putra Malaysia medical epidemiologist Assoc Prof Dr Malina Osman said an obvious decline in cases could be observed, particularly with active cases which stood at over 268,000 in August compared to over 168,000 on Wednesday.

“Similar patterns were observed for other indicators like hospitalisation, the number of patients in ICUS and those on ventilators.

“This indicates that the situation is much better compared to the previous month,” she added.

However, Dr Malina opined that the positivity rate being kept less than 5% was relevant during the late containment stage or earlier but once the outbreak was already in the mitigation stage, the value was no longer helpful in managing the outbreak.

On Covid-19 testing, Dr Malina said from a public health point of view, the numbers were acceptable as Malaysia had opted for targeted screening rather than mass screening.

She added that the focus now should be more on hospitals and clinical indicators rather than the number of screening tests.

On endemicity, Dr Malina said that as the situation had improved greatly and hospitals were no longer in a compromised state, the system would be able to cope.

“The government through the Health Ministry has taken all the necessary steps to cope with the surge of cases for the past few months.

“I think the major responsibility should be shared by the community as well. Communities should be empowered to decide on their own the best way to achieve optimum health status.

“They should know the best option to avoid getting infected. Practising recommended preventive practices and avoiding risky behaviours should be encouraged,” she added.

Malaysian Public Health Physicians’ Association president Datuk Dr Zainal Ariffin Omar agreed that the declining hospitalisation rates and daily cases were good signs as all the indicators were showing a downward trend.

“We are ready for the endemic phase. Vaccination for people over 12 years old should continue and so should surveillance on new clusters and variants,” he said.

The government should also continue with the current testing strategy and monitor the positivity rate until it was down to less than 5%, with over 150,000 daily tests conducted, he added.

The rates for hospitalisation, daily infections as well as deaths are currently declining after the nation was hit with a surge of Covid19 cases in July and August.

According to data from April to September this year, the highest number of Covid-19 patients hospitalised was on Aug 16, when 16,081 hospital beds were occupied, compared to 9,185 on Sept 29.

The highest number of daily infections was also recorded on Aug 26, at 24,599 cases logged compared to 12,434 on Sept 29.

As for deaths, Aug 7 recorded the highest number of actual deaths on a seven-day average at 334 lives lost, while reported deaths stood at 210 on the same date.

In contrast, Sept 29 recorded 88 actual deaths on a seven-day average and 208 reported deaths on the same date.

On Wednesday, Prime Minister Datuk Seri Ismail Sabri Yaakob announced that the entire country had moved out of Phase One of the government’s National Recovery Plan.

by FATIMAH ZAINAL and REMAR NORDIN

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