KUALA LUMPUR: The federal government’s actual debt and liabilities stood at RM1.087 trillion or 80.3 per cent of the gross domestic product (GDP) as at December 31 last year.
In disclosing this, Finance Minister Lim Guan Eng said the amount included more than RM199 billion the government had to pay for various entities which failed to service their debts.
“The official federal government debt is RM686.8 billion or 50.8 per cent of GDP while the government had also committed to pay for Government Guarantees for various entities unable to service their debts. This amounts to RM199.1 billion or 14.6 per cent of GDP.
“The committed government guarantees would include entities such Danainfra Nasional Bhd (RM42.2 billion), Govco Holdings Bhd (RM8.8 billion), Prasarana Malaysia Bhd (RM26.6 billion), Malaysia Rail-link Sdn Bhd (RM14.5 billion) as well as an estimated RM38 billion for 1MDB,” Lim said in a statement today.
He added that based on the two items, the federal government debt would amount to RM885.9 billion, representing 65.4 per cent of the GDP as highlighted by Prime Minister Tun Dr Mahathir Mohamad yesterday.
Lim said the government had also been committed and obligated to make lease payments such as rental, maintenance and other charges for a whole list of “Public Private Partnership” (PPP) projects including the construction of schools, hostels, roads, police stations and hospitals.
“The lease commitments, which were designed specifically to circumvent the Federal Government guarantee and debt limits, amounted to RM201.4 billion or 14.9 per cent of GDP.
“Hence, the Federal Government debt and liabilities amount to a total of RM1,087.3 billion or 80.3 per cent of the GDP as at December 31, 2017,” he explained.
He was responding to former prime minister Datuk Seri Najib Razak’s statement that the debt announcement would “unsettle the financial markets, alarm the credit rating agencies and investors confidence in our institutions such as Bank Negara Malaysia”.
Lim rebutted this, saying that the newly-formed government had decided to bite the bullet now and work hard to solve the country’s problems, rather than let it explode in its face later.
“Let me emphasise that the obligations and financial commitments of the federal government are unchanged before May 9 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 regularize and strengthen our financial state.
Lim stressed that the economic fundamentals remains strong.
“The financial sector is stable, the banking sector is well-capitalised and there is sufficient liquidity in the market. We believe that with the new administration focused on competency, accountability and transparency, investor confidence will only be strengthened over time,” he said.
On Tuesday, the local stock market plunged to its steepest single-day loss in recent years, shedding 40.78 points or 2.2 per cent on selling of heavyweights.
It was reported that investors’ concerns over the size of debt the country’s previous government left behind and weak corporate earnings had pushed Bursa Malaysia’s benchmark FBM KLCI to close at 1,804.25 after opening at 1,845.03 points earlier in the morning.
Today, Bursa hit another lowest point in five months. The key index closed 28.59 points or 1.58 per cent lower to 1,775.66 points.