Borrowings being used to settle debts

by BERNAMA / pic by BERNAMA

AUDITOR-GENERAL (A-G) Datuk Nik Azman Nik Abdul Majid (picture) has expressed worries that 59.9% or RM82.72 billion of the federal government’s new borrowing receipts for the financial year 2019 is used to settle debts.

He said ideally, it should be used for development purposes and to create the multiplier effect in generating the economy.

“Only a small portion which is 29% is channelled to the development fund, which is worrying. Development expenditure should be used more productively so that projects that the government funds give higher multiplier effect to generate the economy and at the same time have value for money,” he said at a media conference at Parliament yesterday.

He said through development projects, the government could collect taxes which could repay the interest and principal of the loans concerned. According to him, the government is projected to repay RM10 billion in 2034 for that year alone.

“In 2034, we have to pay back RM10 billion, which means a significant increase…we have to be prepared even though it is still far away. We have to be prepared with economic activities with huge revenue to meet the commitment to repay (debts),” he said.

Commenting further, Nik Azman said the development allocation for 2019, among others, was used to pay the matured debts of 11 government-owned companies in the form of grants.

The companies involved are DanaInfra Nasional Bhd with an allocation of RM1.5 billion, Suria Strategic Energy Resources Sdn Bhd (RM1 billion), Jambatan Kedua Sdn Bhd (RM327 billion), KL International Airport Bhd (RM82 million), TRX City Sdn Bhd (RM66 million), MKD Kencana Sdn Bhd (RM50 million billion) and SRC International Sdn Bhd (RM388 million).

“The two companies with no development projects are Suria Strategic Energy Resources and SRC International, but they are using development allocation,” he said, adding that the allocation should be channelled in the form of loan or advance, which has to be repaid.

However, he said the usage of the money is not violating Section 8 of the Loan Guarantee Act 1972, but it does not reflect the real accounting ethics in terms of auditing.