GEORGETOWN: Penang state government today said it needs a bridging loan to fund a financial gap in the Penang Light Rail Transit (LRT) project.
Chief Minister Lim Guan Eng said this is the reason why the state government is planning to secure a loan from China.
Lim pointed out that the loan, as a government-to-government agreement, comes with a much lower interest compared to commercial loans.
"If we can get a loan for a lower interest, why not," he said at a press conference here today.
Lim said the loan is known as a bridging loan and the funds will be used to close a financial gap in the LRT project.
"The project is going to be funded by land reclamation sales, but it will take up to two years before the state government can get any earnings," he said.
When asked why a loan and not use its reserve, Lim said the state must keep its reserve for contingency uses.
Yesterday, Lim has denied claims the state government reaped profits amounting to RM12.5 billion from sales of state land to local and foreign developers.
He said the malicious allegations are baseless.
Lim was responding to State Umno Liaison Committee chairman Datuk Seri Zainal Abidin Osman's statement on Sunday which questioned why the Penang government is applying for a loan from a bank in China, when it could utilise the revenue from the sales of state land.
Last Thursday, the Penang Legislative Assembly passed a bill allowing the state government to borrow funds from banks or financial institutions.
Lim had said the bill was part of an “enabling legislation” to borrow money from a Chinese government bank to help fund infra projects.