KUALA LUMPUR: A policy on capping government-guaranteed loans should be established, said the Auditor-General’s Report for the federal government’s financial statement for the year 2018.
This, it said, should be done by taking into consideration the country’s financial position and the companies’ financial capabilities as well as the competitiveness of the firms they would be funding.
“The policy would help in controlling the growing debt faced by the federal government,” said the report, adding that focus should be given to financial statements on loan repayments guaranteed for five Finance Ministry incorporated companies totalling RM2.839 billion.
The government guarantees, totalling RM76.075 billion were approved by the previous administration.
“As of Dec 31, 2018, the overall loan repayment balance of RM66.341 billion would reach maturity in 2041, except for one with a balance of RM94.38 million which ends in 2019.
“The government has settled RM2.839 billion in loan repayments in 2018. Of the total, RM1.753 billion was settled by the previous administration, while RM1.086 billion payment was made by the current government.
“The administration has continued the commitment to prevent an 'event of default' that could result in overall repayment obligations faced by the government."
According to Section 8 of the Loans Guarantee (Bodies Corporate) Act 1965, companies have repayment obligations to the government for the amount that the latter had settled, read the report.
“However, the capability of the five companies to do so could not be ascertained,” it said.