This article first appeared in The Edge Financial Daily on September 24, 2018

KUALA LUMPUR: Finance Minister Lim Guan Eng yesterday issued a statement mocking his predecessor and former prime minister Datuk Seri Najib Razak for what he called Najib’s apparent “wrongful” assumption that the total amount in the government’s Consolidated Fund was available for use.

“Datuk Seri Najib has failed the accounting test by confusing between the Consolidated Fund and Consolidated Revenue Account. Legally, the government can only use the Consolidated Revenue account for its operating expenditures,” Guan Eng said.

He said Najib appears to have difficulty distinguishing the difference between the funds, as the latter had claimed that as at Dec 31, 2017, the federal government had RM18.06 billion to spend, versus Guan Eng’s revelation of RM11.86 billion.

Guan Eng was responding to Najib’s Facebook post on Sept 5, when the latter said it was “impossible” that the Consolidated Revenue Account had dwindled to RM450 million. Najib also said it was always kept at between RM18 billion and RM20 billion each month, and that government officers in their cash flow management would ensure that there would be enough funds to act as “buffers” for at least two months worth of salaries and pensions.

Najib also noted that the financial statements were prepared on the 15th of every month. “For example, for the month of April, the accounts were readied on May 15, when the government had been taken over by PH (Pakatan Harapan). So, I have also never seen the statements for the month of April and was ‘shocked’ by Lim Guan Eng’s accusation that the balance of the Consolidated Revenue Account as at end-April was only RM450 million.”

The Consolidated Fund, Guan Eng explained yesterday, refers to the umbrella fund that is made up of three accounts: the Consolidated Revenue Account, Consolidated Loan Account and Consolidated Trust Account.

According to Guan Eng, the Consolidated Fund position as at Dec 31, 2017 was RM42.18 billion (audited), which dwindled to RM35.5 bilion (unaudited) as at April 30, 2018 (see table). The deterioration was due mostly to the slump in the Consolidated Revenue Account, which shrank by RM11.41 billion to RM450 million, from RM11.86 billion.

This significant fall in the Consolidated Revenue Account, Guan Eng said, was due to excessive spending from January to April this year, which Guan Eng alleged was to help Barisan Nasional win in the May 9 general election.

“Datuk Seri Najib claimed that he was no longer the finance minister when the unaudited monthly financial statements for April 30, 2018 were prepared and he was shocked to learn that the BN government had only left RM450 million in the Consolidated Revenue Account for the new Pakatan Harapan government. This is not true.

“Datuk Seri Najib should not feign ignorance of the distressed state of the fiscal position by insisting that BN (Barisan Nasional) had left tens of billions of ringgit to the new government when there was only RM450 million. Imagine having RM450 million to spend when our emoluments (salaries) and pension payments alone amounted to more than RM8 billion a month? Or is Datuk Seri Najib still at a loss to differentiate or understand what constitutes a Consolidated Revenue Account despite being a finance minister for 10 years?” Guan Eng questioned.

Guan Eng also slammed Najib for questioning the April unaudited financial statements as well as indirectly blaming Guan Eng for manipulating the figures.

“As the former finance minister, Datuk Seri Najib should know very well that the monthly financial statements of the federal government are independently prepared by the Accountant General Department ... Datuk Seri Najib again failed to realise that the new finance minister had not been sworn in yet when the unaudited monthly financial statements for April 30, 2018 were prepared. Datuk Seri Najib should instead explain the drastic drop of RM11.41 billion or 96% in the Consolidated Revenue Account over the four-month period from Dec 31, 2017 to April 30, 2018, leaving the new Pakatan Harapan government with only RM450 million,” Guan Eng added.