PETALING JAYA: The country’s direct debt rose from 50.1% of the gross domestic product (GDP) in 2017 to 51.2% in 2018 because the Pakatan Harapan (PH) government refused to resort to off-balance sheet financing.
“This is unlike the Barisan Nasional (BN) government that turned to such methods to cover up dubious debts,” Finance Minister Lim Guan Eng (pix) said today.
“Since PH took over in May 2018, we have carried out a comprehensive review of the government’s financial obligations, which confirmed that we had accumulated RM1.087 trillion of debt and liabilities as at the end of 2017,” he said in a statement.
“A substantial portion of this comprises hidden debt and liabilities that the previous government had deceitfully kept under wraps or disguised as off-balance sheet items,” he added.
Lim said this included RM38.3 billion worth of 1Malaysia Development Bhd (1MDB) debt that the then government had been secretly servicing.
“The other liabilities amounting to RM260.1 billion involved off-balance sheet government expenditure masked as ‘Public Private Partnership (PPP)’ or ‘Private Finance Initiatives (PFI)’.
“The PPPs and PFIs were abused by the BN government to give the false perception of low budget deficits, and a corresponding lower level of debt,” he said, adding that the financial cost, risks and obligations of these projects laid entirely with the federal government.
Lim said committed government guarantees had also risen from 7.4% of the GDP in 2017 to 9.2% in 2018 due to the projects which were already in progress, including the MRT2, Pan-Borneo Highway and LRT projects.
Despite these increases, Lim pointed out that the government’s total debt and liabilities have been reduced significantly from 79.3% of the GDP in 2017 to 75.4% the following year.
He noted that this was largely due to the reduction in “other liabilities” from 19% to 12.8% of the GDP, with the 1MDB debts also seeing a decrease of 0.6% from 2.8% in 2017.
Lim said the proceeds from divestment of more non-core and non-critical assets by the Prime Minister’s Office in the future would help to reduce the debt and liabilities further.
“Moreover, 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.