This article first appeared in The Edge Financial Daily on November 29, 2019

KUALA LUMPUR: The Pakatan Harapan-led federal government has never borrowed to pay its civil servants’ salaries.

In a statement yesterday, Finance Minister Lim Guan Eng said this had been proven by the reaffirmation of Malaysia’s sovereign credit ratings at A3 or A- with a stable outlook.

He said should the federal government borrow to pay the salaries of its civil servants, this would inevitably lead to an immediate credit rating downgrade.

“Let me reiterate unequivocally that the government has sufficient funds to pay our civil servants and will never borrow to do so,” he said.

Furthermore, Guan Eng said the government is on target to cut its fiscal deficit from 3.7% of gross domestic product in 2018 to 3.4% this year.

He added that all borrowings raised by the government are to finance the fiscal deficit and all development expenditures, as it had been done under the previous administration. None is utilised for operational expenditure like the payment of salaries, he said.

The minister said during the Negeri Sembilan budget debate in the state assembly on Nov 25, Umno deputy president Datuk Seri Mohamad Hasan made an irresponsible allegation that the federal government borrowed money to pay the salaries of its civil servants.

“His statement is false and can be disproved easily,” said Guan Eng.

He pointed out that in the third quarter of 2019, the government’s emoluments were RM19.9 billion.

“In comparison, the government’s total revenue for the same quarter was RM68.8 billion. This means the government’s revenue was more than three times the size of its emoluments,” he said.

Guan Eng said the ministry of finance on Oct 14, 2019 approved the Kelantan government’s request for an advance of RM100 million to assist the state with its operational expenditure, including the payment of salaries until the end of 2019.

“Last year in 2018, the federal government agreed to advance the Kelantan state government RM91.5 million for the same purpose.

“Clearly Mohamad Hasan has pointed to the wrong target and should be referring to the Kelantan state government instead of the federal government,” he said.