Friday 29 Mar 2024
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KUALA LUMPUR (May 26): The previous Barisan Nasional (BN) government has been intentionally and aggressively circumventing even the classification of 'government guarantees' by committing the government to lease payments amounting to RM201 billion over the next few decades, says Tony Pua, the special officer to Finance Minister Lim Guan Eng.

Pua, who is also Member of Parliament for Damansara and DAP national publicity secretary, said the Pakatan Harapan (PH) government was shocked when it discovered that the BN government had awarded more than RM63 billion worth of public-private partnership (PPP) projects, committing the government to RM201 billion of leasing payments over the next decades.

"Not only are these obligations hidden from the government’s liabilities, the cost to the government to carry out these projects are much higher than if the government had just funded these projects with direct borrowings," he said in a statement yesterday.

He cited the Najib administration's intention to award a contract to certain parties to build a new RM500 million polytechnic.

"If the contract were awarded directly, it would have meant an additional RM500 million in borrowings. This would worsen the perception of significantly higher debt, and increase the budget deficit," said Pua.

"And even providing a government guarantee for a government subsidiary to undertake the project would look bad because our guarantees have already increased by leaps and bounds over the past five years," he added.

Pua said the Najib administration had "cleverly abused" the PPP mechanism by awarding a contract to a private "crony" company where the government doesn’t pay directly for the project construction.

"Instead, the government would commit to make monthly lease payments to the company amounting to three times the value of the project, or RM1.5 billion in this case, over the next 10 to 20 years. The private company would then take this lucrative contract to the banks as a collateral to secure the necessary financing to carry out the project," he added.

Pua also noted that Datuk Seri Najib Razak remains in denial, urging the former prime minister to stop lying about the true levels of federal government debt.

On May 24, Guan Eng revealed that the total federal government debt and liabilities amounted to RM1.09 trillion, or 80.3% of the country's gross domestic product (GDP).

The sum comprised RM686.8 billion of official federal government debt (50.8% of GDP), RM199.1 billion (14.6%) of committed government guarantees and RM201.4 billion (14.9%) of lease commitments via the PPP projects, said Pua.

"The very reason why we referred to the ‘official’ federal government debt, is precisely because the ‘official’ figure used by the past Najib administration failed to take into account the true debt obligations by the federal government," he added.

Pua also pointed to the RM199.1 billion figure provided by the finance minister of committed government guarantees.

"These are guarantees which the government has already been called to service, for example, the RM42.2 billion Danainfra Nasional which was used for the construction of the mass rapid transit, or the approximate RM38 billion for 1Malaysia Development Bhd (1MDB). 

"The fact that the finance ministry has been secretly servicing some RM7 billion or more of 1MDB’s debts to date, shouldn’t 1MDB’s debt be considered as federal government debt?  Or is Najib trying to tell the new government that we should continue pretending that these are not our debts?" asked Pua.

Pua said the PH government is committed to being "transparent and taking the bull by the horns".

"We have no intention to maintaining the legacy practice of hiding debts and increasing costs in order to deceive markets. We are committed to a competent, accountable and transparent government because we firmly believe that despite any short term turbulence we might face, we will only come out of this much, much stronger together in the medium to longer term," he said.
 

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