KUALA LUMPUR – The government will be forced to cover for billions of ringgit in shortfall to repay 1MDB debts, even after receiving future settlements and asset recoveries, the Dewan Rakyat was told.
Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz noted that at present, the remaining commitment to 1MDB debts involving its principle and interest payments stood at RM38.8 billion.
In comparison, he said there is only over RM15 billion remaining in the asset recovery trust account.
Tengku Zafrul said even with a further US$954 million (RM4 billion) of assets expected to be recovered from Goldman Sachs and RM515 million in settlement from AmBank, among others, this would mean the government will have to bear approximately RM17 billion.
“The Finance Ministry would like to inform that public funds have been used, and will still need to be used, to settle 1MDB debts, either in terms of direct aid or through asset recoveries,” he said in his winding up speech on the royal address in Parliament today.
“Based on the cash flow of 1MDB debt settlement, the government will still have to cover for a shortfall of RM17 billion for the principal of debt and interest between 2023 and 2039.”
Tengku Zafrul was responding to a question from Ong Kian Ming (Bangi-PH) on previous claims made by former prime minister Datuk Seri Najib Razak (Pekan-BN) that not a single sen was used to repay the debts.
Najib had previously made the remark in the Dewan Rakyat while debating the royal address – a claim that provoked the ire of the opposition who accused him of misleading the House.
Additionally, Ong also noted Najib’s recent Facebook posting that the government could have saved on interest costs had it paid off 1MDB’s bonds ahead of the maturity date.
To this, Tengku Zafrul said the matter is not as straightforward, as it requires the agreement of the bondholder, and will involve complicated legal procedures.
“For bonds that were issued in the US dollar, the government will incur losses, as the bond settlement will be higher, based on the current foreign exchange rate.
“The value of the 1MDB bonds has also increased due to the much higher interest rate today as compared to the interest rates in the market,” he said.
Regardless, Tengku Zafrul gave the government’s commitment that all 1MDB debts will be repaid to avoid the event of a default, which he noted will have grave implications for the country’s economy, as these debts are guaranteed by the administration.
At the same time, he said the government will work to recover more 1MDB-related assets, either through negotiation or legal action, in a bid to reduce its financial burden. – The Vibes, March 14, 2022
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