KUALA LUMPUR — The Finance Ministry says Malaysia’s direct debt rose from 50.1% of gross domestic product (GDP) in 2017 to 51.2% last year to directly fund the fiscal deficit, without the Government resorting to off-balance sheet financing to cover up dubious debts as practised by the previous administration.
This despite the Government’s total debt and liabilities being reduced from 79.3% of GDP in 2017 to 75.4% in 2018, said Finance Minister Lim Guan Eng.
This figure has been confirmed by the bi-partisan Special Parliamentary Select Committee on the Budget in their report dated July 17,2019.
“A substantial portion of this figure comprises hidden debt and liabilities that the previous government had deceitfully kept under wraps or disguised as off-balance sheet items.
“This would include RM38.3bil worth of 1Malaysia Development Bhd debt which we discovered that the then Barisan Nasional government was secretly servicing, ” said Lim.
Lim said the other liabilities amounting to RM260.1bil involved off-balance sheet government expenditure masked as Public-Private Partnership (PPP) or Private Finance Initiatives (PFI).
“However, the financial cost, risks and obligations of these projects lie entirely with the Federal Government, ” he said.
“Hence, the PPPs and PFIs were abused by the then Barisan government to give the false perception of low budget deficits, and a correspondingly lower level of perceived debt.”
Lim said the Prime Minister’s Office was completely in charge of divesting various non-core and non-critical assets to rebalance the government’s portfolio and realign the role of the public sector.
The proceeds from these divestments, when returned to the Treasury in the form of dividends, would be allocated towards further reduction of our debt and liabilities, he said adding that the government was actively pursuing the recovery of assets for funds misappropriated by 1MDB globally.
“To date, we have recovered approximately RM925.1mil not including the sale of the mega-yacht Equanimity for RM523mil.
“We remain committed towards fiscal consolidation while at the same time ensuring that Malaysia remains on a sustainable growth path, despite the weak global economic environment, ” he said.
Meanwhile, Lim advised taxpayers who wish to declare their income voluntarily to the Inland Revenue Board through the Special Programme for Voluntary Disclosure to do so by today, which is the last day of the programme to avoid paying high penalties.
The Finance Ministry would not be extending the programme, he said after launching the Special Road Safety Advocacy programme organised by the Road Safety Department in Butterworth.
Lim said although it would not be approved because the process might take between two weeks to a month, as long as they present it by today, it would be considered valid as they reported by Sept 30.
The programme, announced in the 2019 Budget, was aimed at providing taxpayers who had tax compliance problems a second chance to rectify their tax reporting by offering a low penalty rate.