KUALA LUMPUR: Opposition lawmaker Tony Pua said Prime Minister Datuk Seri Najib Razak was not entirely truthful when he told Parliament yesterday that the government had only guaranteed RM5.8 billion of 1Malaysia Development Bhd (1MDB)’s loans.

Pua said the statement from Najib, who is also the Finance Minister, did not reflect the “letters of support” that the Ministry of Finance has also issued for other loans undertaken by 1MDB.

Pua, who was speaking to reporters in the Parliament lobby today, was referring to the exposé by The Edge weekly in its cover story this week (Oct 27-Nov 2) in which it was reported that the federal government had provided a “letter of support” for 1MDB Global Investments Limited, a wholly owned unit of 1MDB, to borrow US$3 billion (RM9.6 billion) in March 2013.

The weekly, quoting the letter, stated that “in the event 1MDB, as shareholder of the Issuer (1MDB Global Investments), fails to provide the required funds, Malaysia shall then step in to inject the necessary capital into the Issuer or make payments to ensure the Issuer's obligations are fully met”.

“Without outrightly stating that the Government of Malaysia is providing a ‘guarantee’ for the US$3 billion debt, the letter of support has effectively guaranteed the debt! The difference between a ‘guarantee’ and a letter of support where the Government ‘ensures the Issuer’s obligations are fully met’ is purely a matter of semantics,” Pua said in a statement that was also distributed to reporters.

The Edge weekly had reported that the letter of support is valid until March 19, 2023.

Pua added that such letters of support “don’t just appear anywhere; they are hidden and we don't know how many letters of support the government has issued and we don't know [to] whom they have issued them”.

"All these debts are essentially unaccounted for in the federal government accounts. Technically, when we (opposition) debate the budget, there is no (provision) in the budget as to how the government is taking into account 1MDB’s expenditure," he added.

He also expressed concern that in the event if 1MDB is unable to pay, the government will have to pay 1MDB's debt, and that “it will cause a huge debt increase for the federal government, increase our deficit, and affect the way we can spend our money”.

“Perhaps more subsidies will then need to be cut to finance 1MDB's debts,” he added.