Kelantan is the largest debtor state — MOF

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KUALA LUMPUR (Oct 23): The Kelantan state government is the largest debtor among Malaysian states with RM388 million in advance financial assistance still owed to the federal government as at Dec 31 last year, says finance minister Lim Guan Eng.

Lim said Kelantan received RM398 million in overall financial assistance from the federal government in 2016. Such assistance is also given to other states with insufficient funds in their operating accounts.

“Included in the RM398 million figure is a deficit financial assistance amounting to RM59.9 million as the state has insufficient revenue to pay for operating expenses such as salary and emoluments of the staff,” the minister said in a statement today. 

Separately, the Federal Government had also provided an advance loan to the tune of RM100 million to the Kelantan State government to help the state to cover its operating expenditure, Lim added. 

Lim disclosed today that the Kelantan state government applied again for another advance financial aid in June this year to help the state to pay the salaries and emoluments of state government employees. The application was approved by the federal government.

The finance minister was responding to calls by PAS Parliament members that his previous statement on the state’s ailing financial situation, be withdrawn.

Yesterday, Lim remarked in Parliament that the Kelantan state government had insufficient funds to pay its civil servants, after a suggestion by a PAS MP that Kelantan, Pahang and Terengganu be allowed to manage the multi-billion ringgit East Coast Rail Link (ECRL) project if the mega project is cancelled.

Lim’s remark was met with anger and demands for a retraction as opposition MPs had deemed it an insult to the PAS-controlled state government. Responding today, Lim said he is highly disappointed with PAS' reaction, claiming he is unfairly treated.

Lim said that his statement was similar to what then-prime minister Datuk Seri Najib Razak had said on January 28 this year, namely that Kelantan State government is not able to pay the salaries for their civil servants.

On Sept 8, Lim said Kelantan State government is the largest recipient of financial deficit assistance and advance financial assistance from the Federal Government at a total of RM913 million.

“It’s a fact that Kelantan State government is always seeking money from Federal government to help pay its civil servants salaries, since Barisan Nasional party ruled the country before,” Lim said today. 

“I wish to stress that economic management and financial administration must be done based on facts and figures, not sentiment and malicious slander. It is difficult to restore public and investor confidence or to redevelop a failed state if we ignore facts and figures,” the finance minister added.