KUALA LUMPUR (Dec 6): Finance Minister Lim Guan Eng said today that the Malaysian government's direct debt had at most increased RM94.1 billion to RM799.1 billion since Pakatan Harapan took over the government until end-June 2019.
In a statement today, Lim said the RM94.1 billion increase in direct debt had financed development expenditure, fiscal deficit and debt repayments, which include 1Malaysia Development Bhd (1MDB) borrowings.
"The RM94.1 billion direct debt increase is in stark contrast to the oft-repeated mistaken claim that direct debt had increased by RM245 billion, as made by irresponsible parties.
"Finally, total 1MDB debt including its interest is RM50.5 billion, which will only be fully paid off by 2039. The government will have paid RM13.9 billion to finance debt and interest relating to 1MDB and SRC International Sdn Bhd 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," Lim said.
The Pakatan Harapan government was formed after the coalition won Malaysia's 14th General Election, which was held on May 9, 2018.
According to Lim, the government's direct debt stood at RM705 billion as of the first quarter of 2018. As of the second quarter of 2019, the figure rose RM94.1 billion to RM799.1 billion, he said.
"I would like to take this opportunity to correct public misconception about 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.
"As published by Bank Negara Malaysia, Malaysia’s total external debt stood at RM931.1 billion as of end-June 2019. However, only RM190.0 billion of the external debt belonged to the government, through its direct debt," he said.
Lim's statement today was issued in conjunction with the country's debt management committee's (DMC) meeting on Monday (Dec 2).
Today, he said the committee had during the meeting, highlighted the importance of containing government guarantees (CG) and public-private partnership (PPP) obligations, in order to avoid unnecessary inter-generational transfers of debt burden.
"The DMC endorsed the Federal Government’s 2020 Borrowing Programme, which include the option of issuing another tranche of the Samurai bonds. Furthermore, the committee evaluated existing and additional GG facilities, and new best practices in assessing and monitoring contingent liabilities using the latest fintech," he said.