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Truth On Debt Allows Govt To Take Concrete Action

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PUTRAJAYA – The decision to reveal the truth on Malaysia’s actual debt will enable the government to take concrete action to regularise and strengthen the country’s finances, said Finance Minister Lim Guan Eng.

Responding to a statement by former prime minister and finance minister Datuk Seri Najib Tun Razak who said the disclosure of the country’s RM1 trillion debt would affect investor confidence, Lim said the government intended to establish the true baseline on the nation’s finances, diagnose the problems and prescribe the necessary remedies.

“We would like to explain that the new government will carry out its administration based on the principles of competency, accountability and transparency (CAT).

“In the short-term, the decision to tell the truth may unnerve Najib but we believe that recognising our true debt situation will enable the government to take concrete action to regularise and strengthen our financial state,” he told a press conference here today.

The finance minister also refuted Najib’s claim that the debt announcement caused markets to react negatively, stating it was not possible to identify whether markets would rise or fall due following one statement made by the government as other regional markets also fell today.

Lim said the RM1 trillion debt, as at Dec 31, 2017, included RM686.8 billion in Federal government debt plus RM199.1 billion of government guarantees to pay on behalf of entities which were unable to service their debt.

“These government guarantees would be for entities such as Danainfra Nasional Bhd (RM42.2 billion), Govco Holdings Bhd (RM8.8 billion), Prasarana Malaysia Bhd (RM26.6 billion), Malaysia Rail-Link Sdn Bhd (RM14.5 billion) and an estimated RM38 billion for 1MDB,” he said.

Lim explained that the government was also committed to RM201.4 billion in lease payments for rental, maintenance and others charges for public-private partnerships projects such as the construction of schools, hostels, roads, police stations and hospitals.

“These lease commitments, designed specifically to circumvent the Federal government guarantee and debt limits, amounts to RM201.4 billion. Hence, the Federal government debt and liabilities amount to RM1.08 trillion as at Dec 31, 2017,” he said.

The minister, however, reiterated that Malaysia’s economic fundamentals remained strong, the financial sector was stable, the banking sector well-capitalised and there was sufficient liquidity in the market.

“We believe with the new administration focusing on CAT, investor confidence will only be strengthened over time,” he added.

Lim also acknowledged the professionalism of Treasury officials, led by Deputy-Secretary General Datuk Siti Zauyah Mohd Desa, in preparing and presenting all the relevant information without “fear or favour”. – BERNAMA

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