National debt and liabilities reduced, announces Lim Guan Eng

Minister of Finance Lim Guan Eng

PUTRAJAYA:  The Pakatan Harapan (PH) government has been able to control and reduce the overall national debt and liabilities to 75.4% of the GDP in 2018 from 79.3% in 2017.

Minister of Finance, Lim Guan Eng said, despite a rise in direct government debt, the overall debts and liabilities dropped by 3.9 % due to rationalisation of overpriced mega projects and Public Private Partnership (PPP) payments.

“The cost rationalisations efforts were done on the ERCL, MRT2, LRT3 and other mega projects. For example the cost of LRT3 which would have been borne by the government has been cut by 47% or RM15.02 billion.

“MRT saw a savings of RM8.8 billion while 121 smaller infrastructure projects worth more than RM21.5 billion nationwide has saved RM806 million. On the ECRL project there was a saving of RM21.5 billion costing RM44 billion now from the original cost of RM65.5 billion,” he said in a statement today.

Guan Eng added, the cancellation of the two pipeline projects under Suria Strategic Energy Resources Sdn. Bhd.(SSER) in which 88% of the RM9.4 billion total cost has been paid despite only 13% of work purportedly done.

Meanwhile Guan Eng explained that direct government debt rose by 1.1 percentage point to 51.2% of GDP in 2018 from 50.1% in 2017. The rise was to finance the fiscal deficit as it has been done annually under the previous administration.

He also said the government guarantees rose by 1.8% to 9.2% of GDP in 2018 from 7.4% in 2017. The rise in committed government guarantees were caused by the continuing payments for existing infrastructure projects and among them are MRT, Pan-Borneo Highway and the East Coast Rail Line mega projects entered into by the previous administration.

 However he said, the commitments made by the previous government included lease payments for PPP and other liabilities (such as 1MDB) that fell by 6.8% to 15.0% of GDP in 2018 from 21.8% in 2017. It is this component that enabled the government to successfully reduce its overall debt and liabilities within a year.

“The government newly established Debt Management Committee is pressing on with its fiscal consolidation exercise to slow down the growth of direct government debt without affecting the economy’s growth,” he said.

Guan Eng believes this exercise along with cleaner and good governance will help reduce the overall debt and liabilities of the government further in 2019 and beyond.-Malaysia World News

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