GLCs’ debts not ‘timebomb’, Treasury sec-gen says

Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said companies under the Non-Financial Public Corporations (NFPC) category, including Petronas and Khazanah Nasional, incurred such debts for investment purposes. — Picture by Choo Choy May
Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said companies under the Non-Financial Public Corporations (NFPC) category, including Petronas and Khazanah Nasional, incurred such debts for investment purposes. — Picture by Choo Choy May

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KUALA LUMPUR, Oct 24 — The debt levels of government-linked companies is not a “timebomb” for Malaysia as they are profit-making firms that can pay off their loans, a senior Treasury official said today.

Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah, who was responding to DAP MP Tony Pua’s remarks yesterday, instead indicated that such companies under the Non-Financial Public Corporations (NFPC) category incurred such debts for investment purposes.

“But NFPC, they are Petronas, Khazanah (Nasional), all these government-linked companies, of course they have investments, huge investments, for example Petronas investing RM5 billion more every year, RAPID project... they have their own borrowings and so on,” he said in his keynote address at an event here.

“We cannot put that as a timebomb, you know everybody needs to invest — building MRT line, people will later part utilise, people will pay for tickets, the revenue will be there,” he said, adding that such GLCs will be able to repay their own loans.

“So linking NFPC to the government debt level — it’s a contingency liability, it’s a pressure we know, but it’s not timebomb kind of thing because they can repay their loan, they are big entities, big large resources, they are profit-making entities, all these entities like Tenaga Nasional (Berhad), Telekom,” he said.

“I don’t know why he is saying it’s a timebomb. And in the first place, we won’t publish if we are hiding. We are publishing the figures,” he said, noting that the Finance Ministry had publicly issued figures on the federal government’s debt level and its contingent liabilities amount.

“Don’t worry, the country is good, financially sustainable, there are countries with (debt of) over 100 per cent (of GDP), we are below 55 per cent. So in IMF definition, we are mid-level,” he said, referring to the International Monetary Fund by its initials.

As of end June 2016, the federal government debt is at RM655.7 billion or 53.2 per cent of the GDP.

Mohd Irwan was speaking at a post-Budget dialogue session organised by the Malaysian Economic Association (MEA) and titled “Budgetary Priorities in a Challenging Economic Environment”.

Yesterday, Pua claimed that the federal government had managed to cut down its budget deficit by allegedly hiding its spending on multi-billion ringgit projects — such as the Mass Rapid Transit (MRT) and Light Rail Transit (LRT) extension projects — under the NFPC category.

Citing the Finance Ministry’s data in the Malaysia Economic Report 2016-2017, Pua said the NFPCs includes 29 GLCs and had experienced a rise in spending deficit from RM10.6 billion in 2013 to RM52.3 billion (2014) and RM56.9 billion (2015) and is expected to be RM50.5 billion this year.

Pua said that the spending deficit levels of NFPCs had exceeded the federal government’s budget deficits — RM37.2 billion (2015) and estimated sums of RM38.7 billon and RM40.3 billion in 2016 and 2017.

Pua claimed that the NFPC deficit is “the biggest time bomb to the Malaysian public finances”, saying that the federal government’s annual allocation in its budget for “debt service charges” has been increasing as it allegedly has to pay off interests and loans that the NFPCs are unable to pay.

He also highlighted that Putrajaya’s debt service charges have gone up from RM20.3 billion in 2013 to an expected RM28.9 billion in 2017. 

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