THE government’s direct debt has increased from 50.1% of GDP in 2017 to 51.2% in 2018 because the Pakatan Harapan (PH) government has refused to resort to off-balance sheet financing to cover-up dubious debts, said Finance Minister Lim Guan Eng.
However, he said the government’s total debt and liabilities have been reduced from 79.3% of GDP in 2017 to 75.4% in 2018.
Lim said the PH government discovered that the previous Barisan Nasional administration had left the national coffers with accumulated debt and liabilities totaling RM1.087 trillion as at the end of 2017.
“A substantial portion of this figure comprises of hidden debt and liabilities that the previous government had deceitfully kept under wraps or disguised as off-balance sheet items.
“This would include RM38.3 billion worth of 1MDB debt which we discovered that the then BN government was secretly servicing,” he said in a statement today.
Lim said other liabilities amounting to RM260.1 billion involved off-balance sheet government expenditure masked as “public private partnership” (PPP) or “private finance initiatives” (PFI).
“However, the financial cost, risks and obligations of these projects lay entirely with the federal government.
“Hence, the PPPs and PFIs were abused by the then BN government to give the false perception of low budget deficits, and a corresponding lower level of perceived debt,” he said.
Lim also said the committed government guarantees have increased due to projects which are already in progress, such as MRT2 and Pan-Borneo Highway via DanaInfra, and LRT3 via Prasarana.
He said the government has successfully renegotiated the cost of these mega-projects, with the overall cost of LRT3 reduced from RM31.6 billion to RM16.6 billion, the MRT2 construction cost reduced from RM39.4 billion to RM30.5 billion while the ECRL construction contract with China Communications Construction Company (CCCC) reduced from RM66.5 billion to RM44 billion.
“The reduction in cost for these three projects alone would reduce our future committed government guarantees by at least RM46 billion compared to if all projects had continued without any rationalisation,” he said.
He added the government is actively pursuing the recovery of assets for funds misappropriated by 1MDB globally.
“We have recovered approximately RM925.1 million to date, not including the sale of the mega-yacht Equanimity for RM523 million.
“These and future recovery proceeds will go entirely towards the repayment of 1MDB debts,” he said.
Lim said the government remains committed towards fiscal consolidation while ensuring that Malaysia remains on a sustainable growth path despite the weak global economic environment.