1MDB, DanaInfra add RM28b to govt liabilities in 2018

Out of the overall amount, RM124.5b were directly guaranteed debt for 8 firms owned by MoF Inc

by ALIFAH ZAINUDDIN / pic by ISMAIL CHE RUS

THE government’s contingent liabilities were up by RM28.3 billion to RM266.4 billion in 2018, on higher guaranteed loans across several statutory bodies and state-owned companies.

This included DanaInfra Nasional Bhd, which saw an increase of RM10.6 billion for the year, followed by the Public Sector Home Financing Board (RM6.3 billion), Suria Strategic Energy Resources Sdn Bhd (RM5 billion), Prasarana Malaysia Bhd (RM4.8 billion) and Malaysia Rail-Link Sdn Bhd (RM4.4 billion).

Finance Minister Lim Guan Eng (picture) said, out of the overall amount, RM124.5 billion were directly guaranteed debts for eight companies owned by Ministry of Finance (MoF) Inc namely, Assets Global Network Sdn Bhd, DanaInfra, Govco Holdings Bhd, Jambatan Kedua Sdn Bhd, Kuala Lumpur International Airport Bhd, Prasarana Malaysia, Malaysia RailLink and Suria Strategic Energy Resources.

He highlighted, however, that guarantees for the National Higher Education Fund Corp and Khazanah Nasional Bhd were lower by RM2.5 billion and RM2 billion respectively for the year.

Lim said this in a parliamentary written reply last week to Jeli MP Datuk Seri Mustapa Mohamed who asked the government to state the amount of contingent liability component in the national debt in 2018 and the amount of the liability which had been realised.

Lim said the government had also guaranteed RM31.6 billion of 1Malaysia Development Bhd’s (1MDB) debts in 2018, out of the RM5 billion Islamic debt paper (sukuk) issued in 2009.

“However, it must be stressed that the RM31.6 billion are merely the principal. Inclusive of the RM11 billion interest and the RM8.3 billion capital injection from the MoF, the entire amount of 1MDB’s liability is at RM50.9 billion,” Lim said.

He added that about RM26.6 billion of 1MDB’s debt papers are expected to mature in five years, with the remaining balance of the troubled fund’s debt estimated to stand at RM5 billion at end-2023.

It was reported that the amount of government-guaranteed debt has more than tripled in less than a decade. The amount grew from RM66.4 billion in 2008 to RM187.2 billion or 15.2% of GDP in 2016. In the first nine months of 2017 alone, it shot up to RM226.9 billion.

“The government is taking steps to ensure that the debt exposure and contingent liabilities are at a more manageable level. These measures include the review of high-cost projects and the restructuring of some government-guaranteed loans.

“Apart from that, the federal administration will also continue its cost-saving measures to achieve fiscal consolidation. These actions are expected to cut the deficit further, and reduce the government’s debt exposure and liabilities,” Lim said.

The government had previously claimed that its debt had spiralled to about RM1 trillion. However, the Opposition questioned the government’s claims, seeking Putrajaya to provide a detailed explanation of the total debts.

Prime Minister Tun Dr Mahathir Mohamad recently said Malaysia’s debt level is more manageable now and the government will continue to dispose of assets to hive off its borrowings.

“But we see a possibility of reducing more debts through identifying government assets which we can sell. So at the moment the process is ongoing, it is not static, it is being worked on all the time. So I can’t give you the exact figure, but I believe it has been reduced quite considerably,” he said last week.

Dr Mahathir said the debt-to-GDP ratio has been lower as the economy grows.

The government has also reduced the contract value of a few projects to curb its debts.