MP SPEAKS | Penang LRT loan guarantee small compared to state allocation
MP SPEAKS | The RM2 billion federal government guarantee for Penang's reported RM2 billion Asian Development Bank (ADB) loan for the state's LRT project is small compared to allocations previously received by the state.
Penang previously received back three percent in allocations from its yearly RM7 billion tax payments to the federal government. Instead of RM2 billion in direct allocations however, this is merely a loan guarantee with no risk to the federal government. This is also when the Penang government has a proven track record of not defaulting on its debt obligations.
Further, Penang’s sterling financial performance since 2008 is proven by having the lowest debts amongst all states in the country of RM58 million. This is compared to states that owe the federal government more than RM3 billion and even default on loan repayments.
Why is the federal government willing to...
MP SPEAKS | The RM2 billion federal government guarantee for Penang's reported RM2 billion Asian Development Bank (ADB) loan for the state's LRT project is small compared to allocations previously received by the state.
Penang previously received back three percent in allocations from its yearly RM7 billion tax payments to the federal government. Instead of RM2 billion in direct allocations however, this is merely a loan guarantee with no risk to the federal government. This is also when the Penang government has a proven track record of not defaulting on its debt obligations.
Further, Penang’s sterling financial performance since 2008 is proven by having the lowest debts amongst all states in the country of RM58 million. This is compared to states that owe the federal government more than RM3 billion and even default on loan repayments.
Why is the federal government willing to tolerate RM3 billion in unpaid debts from “politically friendly” states compared to Penang’s existing debts of RM58 million or even with the RM2 billion ADB loan guarantee?
ADB will only extend this RM2 billion loan to Penang after carrying out rigorous and extensive due diligence exercise on the repayment ability of the Penang state government. Clearly, Penang has passed this financial test based on its past financial performance since 2008.
Further, the LRT project is viable and needed to overcome traffic congestion in both Penang and Seberang Perai that is impeding economic growth prospects.
Failure by the federal government to honour this loan guarantee without any financial justification is tantamount to political vengeance against the people of Penang. When Pakatan Harapan was in power, states governed by PAS or BN were given financial assistance when they were unable to meet their operating expenses, including payment of civil servants’ salaries.
Despite PAS’ ideology of racism and religious extremism, I approved RM100 million in emergency funds to Kelantan in my capacity as Finance Minister, to help Kelantan meet its operating expenses, including payment of civil servants’ salaries. In other words, Kelantan was practically bankrupt and could only pay its civil servants in 2018 and 2019 with federal government assistance.
Separately, Harapan even honoured its promise of oil royalty payments by paying out RM400 million to Kelantan and RM200 million to Pahang. This was never done by the previous BN federal governments.
Unfortunately, the Kelantan government chose to purchase Mercedes Benz for its executive council members instead of helping the poor in the state. And yet, Harapan and I continue to be accused of being anti-Malay or anti-Islam by both PAS and BN as the beneficiary of this financial largesse.
LIM GUAN ENG is Bagan MP, former finance minister, and former Penang chief minister.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
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