KUALA LUMPUR – The country’s overall debt and liabilities climbed to RM1.261 trillion last year, revealed Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz.
He said the government’s burden has risen to 89.2% of gross domestic product (GDP), of which 15% alone is in the form of guaranteed commitments and servicing 1Malaysia Development Bhd (1MDB) loans.
During the ministry’s press conference on the country’s economic and financial situation yesterday, Tengku Zafrul said the guaranteed commitments and 1MDB loans are part of the government’s unproductive legacy debts constraining the nation’s coffers.
He said Putrajaya’s debt stands at RM879.6 billion, or 62.2%, while guaranteed commitments are at RM179.2 billion. Concerning 1MDB, the government still has RM31.1 billion to settle.
Other liabilities totalled RM171.8 billion, he added, of which RM119 billion is related to public-private partnerships, RM48.1 billion is for private finance initiatives (PFIs), and RM4.7 billion is for ministry-owned Pembinaan BLT Sdn Bhd.
In total, he said, unproductive legacy debts and liabilities stand at RM115.4 billion, of which RM48.1 billion is off the annual budget’s balance sheet. The government’s legacy debt stands at RM63.3 billion.
Fewer funds for Covid-19 battle
Tengku Zafrul said both the legacy and PFI issues have hampered Putrajaya’s ability to spend funds to tackle the Covid-19 pandemic.
“There have been many criticisms on why the government is not increasing debts to help the people and businesses.
“Between 2008 and 2017, the federal government’s debt increased by more than 120%, but more significantly was the total government guarantees, which increased by more than 240% over the same period.”
The previous Pakatan Harapan government had revealed that the government’s debt and liability position had reached RM1 trillion by the end of 2017, he added.
“However, the government at that time was still taking steps to reduce government revenue by abolishing the goods and services tax (GST).”
Tengku Zafrul said all the liabilities were made beforehand but, apart from interest payments, the government must repay the principal from now on.
He added that 1MDB’s interest payments alone have amounted to RM1.7 billion a year.
Moreover, he said, 1MDB’s principal debt will mature in the near-term, namely the debts of 1MDB Energy Ltd and 1MDB Energy (Langat) amounting to RM14.7 billion next year, as well as global bonds worth US$3 billion in 2023 (RM12.6 billion).
The minister said the principal debt of SRC International Sdn Bhd – with a balance of about RM2.5 billion – will also mature next year.
“In addition to unproductive guarantee commitments, included under ‘other liabilities’ is the PFI debt of RM48 billion arising from the previous administration’s approach to off-budget expenditure not allocated in the annual budget.
“On the principle of transparency, the Perikatan Nasional government will not repeat the practice of off-budget spending.
“We have not and will not repeat this same practice.” – The Vibes, April 27, 2021
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