The Finance Ministry revealed that Malaysia’s total debts amounted to RM1.087 trillion, which is 80.3% of the country’s gross domestic product (GDP) as at the end of last year.
This was revealed after the official debt, contingent liabilities and lease payments for the public-private partnerships were calculated.
The ministry stated official debt amounted to RM686.8 billion (50.8% of GDP), while government guarantees for various entities that were unable to pay their debts was at RM199.1 billion (14.6% of GDP).
Such government guarantees for entities that were struggling to pay their debt, were for entities such as Danainfra Nasional Bhd (RM42.2bil), Govco Holdings Bhd (RM8.8bil), Prasarana Malaysia Bhd (RM26.6bil) and Malaysia Rail Link Sdn Bhd (RM14.5bil), as well as an estimated RM38bil for 1Malaysia Development Bhd (1MDB).
Furthermore, commitments to pay lease payments through public private partnerships were at RM201.4billion (14.95 of GDP).
Finance Minister Lim Guan Eng, in a statement, said transparency of debt would allow recognition of the country’s true debt situation and allow the federal government to take proper action in a bid to strengthen the nation’s financial standing.
“Malaysians are rightly concerned with our debt situation, as we were when we were in the opposition.
“We would like to explain that the new government will carry out its administration based on the principles of competency, accountability and transparency (CAT). We want to establish the true baseline on the state of financial affairs, diagnose the problems and then prescribe all necessary remedies,” he said.
Based on the official debt of RM686.8 billion and the guarantees for companies that cannot repay their debt, the federal government debt would amount to RM885.9 billion, which is 65.4% of GDP.
Lim said the federal government is committed and obligated to make lease payments (including rental, maintenance and other charges) for a list of ‘public private partnership’ projects including construction of schools, hostels and roads, among others.
He further stressed that the fundamentals of the economy remained strong and that the financial sector was stable, while the banking sector was well-capitalised.
Meanwhile, former Prime Minister Datuk Seri Najib Tun Razak had released a statement critising the governments move to announce the RM1trilllion government debt, as it would unsettle financial markets and affect investors’ confidence and credit rating agencies.