GDP up, so national debt now more manageable, PM says

Prime Minister Tun Dr Mahathir Mohamad (centre) speaks during a press conference at Parliament April 4, 2019. — Picture by Yusof Mat Isa
Prime Minister Tun Dr Mahathir Mohamad (centre) speaks during a press conference at Parliament April 4, 2019. — Picture by Yusof Mat Isa

KUALA LUMPUR, April 4 — The over RM1 trillion sovereign debt inherited by the Pakatan Harapan (PH) government last year has been reduced to a more manageable level today, Tun Dr Mahathir Mohamad said in Parliament.

The prime minister attributed the reduction of national debt to the recent increase in GDP.

“At first our findings revealed that the government debt had exceeded RM1 trillion. That is a huge sum when compared to the national GDP. Now that the national GDP has increased, the debt percentage has also reduced.

“That is a fact. Secondly, after we have settled some of the debts, our debt has reduced. Now we are near the level where the debt will not affect our administration and efforts to develop the country,” he said during Question Time in reply to Pontian MP Datuk Seri Ahmad Maslan.

The Barisan Nasional lawmaker had asked the PM to clarify the current level of the national debt, after Finance Minister Lim Guan Eng yesterday said the amount stood at RM686 billion.

The Council of Eminent Persons (CEP) had initially declared national debt and liabilities to surpass RM1 trillion last year.

"Does the CEP report state the method on how to reduce our debt? Yesterday, the Finance Minister said our national debt is RM686 billion and not RM1 trillion?" asked Ahmad.

The prime minister explained that yesterday's figure reflected the reduced official debt after the steps taken by the government.

After PH took over Putrajaya in May last year, the finance minister revealed sovereign debt to be at RM686.6 billion, which is 50.8 per cent of the GDP.

The remaining amount was due to liabilities, which are legal financial obligations not quite the same as debts.

The government had a guarantee of RM199.1 or 14.6 per cent of the GDP and had committed to pay the debts of government-linked companies that could not do so.

This includes the RM42.2 billion for Danainfra Nasional Bhd, RM26.6 billion for Prasarana Malaysia Bhd and RM38 billion for 1MDB.

Public-private projects also had lease payments of RM201.4 billion where Putrajaya is obligated to pay rental, maintenance and other costs for the construction of schools, hospitals and roads.

However, since then, the federal government had taken cost cutting measures as well as renegotiating multiple mega projects including the East Coast Rail Link and the Mass Rapid Transit and driven the costs of the projects down.