Finance minister: Direct debt up but overall borrowings, liabilities now proportionally lower

Lim said that Putrajaya will continue with efforts to reduce the government’s total debt and liabilities, and not just address direct debt alone. — Picture by Yusof Mat Isa
Lim said that Putrajaya will continue with efforts to reduce the government’s total debt and liabilities, and not just address direct debt alone. — Picture by Yusof Mat Isa

KUALA LUMPUR, June 2 — The federal government’s rationalisation of “overpriced” projects and private partnership payments (PPP) has lowered the country’s debt level to 75.4 per cent as a ratio of the economy, Finance Minister Lim Guan Eng said today.

Lim acknowledged there was an increase in direct government borrowings but stressed that measures taken resulted in a 3.9 percentage point decline in the debt-to-GDP ratio in 2018.

“The federal government’s debt and liabilities would have risen higher, were it not for various cost rationalisation efforts done by the present government on the ECRL, MRT2, LRT3 and other megaprojects,” Lim said in a statement.

The minister pointed out that renegotiations resulted in a RM15 billion drop in the LRT3 cost, RM8.8 billion for the MRT2, and RM21.5 billion for the ECRL.

The biggest contributor to the decline was the 6.8 percentage point reduction in PPP that brought these down to just 15 per cent of the government’s combined debt and liabilities.

This drop was offset, however, by a 1.1 percentage point and 1.8 percentage point increase in direct government debt and guarantees, respectively.

Lim added that Putrajaya will continue with efforts to reduce the government’s total debt and liabilities, and not just address direct debt alone.

“The government’s newly established Debt Management Office is pressing on with its fiscal consolidation exercise to slow down the growth of direct government debt, without affecting the economy’s growth.

“This exercise, along with cleaner and good governance, will help reduce the overall debt and liabilities of the government further in 2019 and beyond.”

After taking office as finance minister last year, Lim declared the government’s debt to be in excess of RM1 trillion.

The Pakatan Harapan government subsequently launched the Tabung Harapan initiative as an outlet for Malaysians who wanted to help pay down the country’s debt and raised over RM202 million.