PUTRAJAYA: The Debt Management Committee (DMC) has underscored the need to contain government guarantees (GGs) and obligations for public-private partnerships (PPPs).
Finance Minister Lim Guan Eng said this was highlighted when the committee met on Dec 2 to discuss ways to manage the government’s debts and liabilities.
"This has to be done to avoid unnecessary inter-generational transfers of debt burden, where our children will be paying off our debts," he said in a statement today.
The DMC also endorsed the federal government’s 2020 Borrowing Programme, which includes the option of issuing another tranche of the Samurai bond, he added.
Lim said the committee had also evaluated existing and additional GG facilities, and new best practices in assessing and monitoring contingent liabilities using the latest fintech.
"In the medium-term, the government targets to lower its debt and liabilities to 65 per cent of GDP by end-2025, from 77.1 per cent as of end-June 2019.
"The debt and liabilities comprise the government’s direct debt, committed government guarantees, 1MDB debt and other liabilities, namely PPPs, Pembinaan BLT Sdn Bhd (PBLT) and private finance initiatives (PFI)," he added.
As presented in the 2020 Fiscal Outlook and Federal Government Revenue Estimates report, Lim said the government’s debt and liabilities lowered from 79.3 per cent of GDP in 2017 to 77.1 per cent of GDP by end-June 2019.
The minister also corrected public misconception about the country’s external debt.
"External debt is different from the government’s direct debt. Unlike direct debt issued directly by the government, external debt comprises individual, corporate and government debt held by foreigners, as well as offshore borrowings and non-resident deposits," he said.
As published by Bank Negara Malaysia, Lim said Malaysia’s total external debt stood at RM931.1 billion as of end-June 2019.
"However, only RM190 billion of the external debt belongs to the government through its direct debt.
"Furthermore, the direct debt increased to RM94.1 billion since the Pakatan Harapan took over the government until end-June 2019," he said.
Lim attributed the RM94.1 billion increase in direct debt to financing development expenditure, the fiscal deficit and debt repayments (including 1MDB).
"The RM94.1 billion increase in direct debt is in stark contrast to the oft-repeated mistaken claim that direct debt had increased by RM245 billion, as made by irresponsible parties," he said.
Lim reiterated that total 1MDB debt, including interest, is RM50.5 billion, which will only be fully paid off by 2039.
"The government would have paid RM13.9 billion to finance debt and interest relating to 1MDB and SRC International Sdn Bhd (SRC) from 2017 until 2020.
"The RM13.9 billion payments for 1MDB and SRC by the government is a direct loss to the people that could have been used for the country’s welfare instead," he added.