PARLIAMENT | Prime Minister Dr Mahathir Mohamad is uncertain if the Japanese government would provide low-interest loans.

He said this is because the previous BN administration had taken high-interest loans from Japan, resulting in costs that were too high for the government to bear.

“We are trying to get a Japanese loan facility to reduce the high cost of financing, because the loan interest rate for the previous administration was too high – up to six percent – while Goldman Sachs was given a 10 percent commission of the total debt.

“This means the previous government took 90 percent of the debt proceeds but had to pay the interest on a 100 percent debt,” he told the Dewan Rakyat during the question-and-answer session this morning.

In the past, Mahathir said, Malaysia received soft loans from the Japanese government at a 0.7 percent interest rate over a 40-year period.

“We don't know whether the Japan government will now give us such a low interest, but paying back the debt with a lower-interest yen loan means we will not bear a high-interest loan at six percent. Yen debt will replace a US dollar or ringgit-denominated loan.

“We will still bear the debt but the financing cost decreases,” added the prime minister.

Mahathir was responding to parliamentary opposition leader Ahmad Zahid Hamidi (BN-Bagan Datuk), who asked for Putrajaya's justification in borrowing from Tokyo when the yen had higher currency value compared to the ringgit, despite the purportedly lower interest.

Met at the Parliament lobby later, Mahathir said he has no idea how much the loan from his Japanese counterpart would be or the interest rate.

"But we expect the rate to be much lower than the rate incurred by the previous government," he added.

He also accused the previous administration of using government-linked companies to bypass the debt ceiling.

By doing so, Mahathir said, the government could borrow more through those companies.

"Today, the government is facing a big loss because 1MDB borrowed RM42 billion. As far as we know, not a single sen has been brought back," he added.