Since the day Prime Minister Tun Dr Mahathir Mohamad made the shocking revelation that Malaysia’s debt now stands at an alarming RM1 trillion, opposition parties have been asking for a clarification
The RM1 trillion debt figure stood in stark contrast to the figure given by the former prime minister Najib Razak, who was also the Finance Minister.
Last year, Najib had told the Dewan Rakyat in a written reply that the federal government’s debt position stood at RM685.1 billion as of June 2017.
So on 23 May, Najib took to his official Facebok page to warn that further confusing and misleading statements would result in actual losses to the country. “Coming out to say that our country’s government debt to GDP is now 65%, which is a big jump from the official 50.9% figure, and that our debt is now RM1 trillion without giving any details of what you mean will just unsettle the financial markets, alarm the credit rating agencies and investors confidence in our institutions.”
Others from Barisan Nasional coalition accused Tun Dr Mahathir of randomly “picking” up the figure and asked for an explanation
Wanita MCA vice-chairman Senator Ong Chong Swen, in urging for a clarification on how the figure of RM1tril was calculated, said that “if there is confusion, foreign investors will lose confidence and further affect the country’s economic stability”. UMNO Youth deputy chief Khairul Azwan Harun even questioned the motive behind the announcement, asking if it “amounted to a political blame game”.
“Is his adviser failing to provide accurate information or is it just a political trick so people think that the rate of national debt increased because of the weakness of the previous government?”, Khairul asked in his statement on Monday, 21 May.
So on Thursday, 24 May, Finance Minister Lim Guan Eng gave a breakdown of the government debt and liabilities that actually exceeds the RM1 trillion figure, standing at RM1.087 trillion
The government’s debt and liabilities as at 31 December 2017:
- Federal government debt of RM686.8 billion, or 50.8% of GDP.
- Lease payments for public-private projects of RM201.4 billion, or 14.9% of GDP.
According to LGE, the government is obligated to pay for the rental, maintenance and other costs on a number of “Public-Private Partnership” (PPP) projects including the construction of schools, hostels, roads, police stations and hospitals.
- Government guarantees of RM199.1 billion, or 14.6% of GDP.
The government is committed to paying the debt of entities which are unable to do so, including RM42.2 billion for Danainfra Nasional Bhd, RM26.6 billion for Prasarana Malaysia Bhd and RM38 billion for the insolvent 1MDB.
That takes the total debt to RM1.087 trillion, or 80.3% of GDP.
LGE also remarked that while the decision to tell “the truth may unnerve Najib”, the new government puts “the interest of the people first”, adding that hence it is necessary to “bite the bullet now” rather than “let it explode in our faces at a later date”
The Finance Minister also said that while “Malaysians are rightly concerned with our debt situation”, the Pakatan Harapan Government will take action to fix it.
“Let me emphasise that the obligations and financial commitments of the federal government are unchanged before 9 May and after elections today. The only change is that the new government has decided to call a spade a spade.
“In the short term, this decision to tell the truth may unnerve Najib. However, we firmly believe that in the medium term, by recognising our true debt situation today, it will enable the federal government to take concrete actions to regularise and strengthen our financial state,” read the statement by Finance Minister Lim Guan Eng. — Says.com