The PAS-led Terengganu government has sliced 92 percent off the state's debt to the federal government, reducing it from RM720 million in 1999 to about RM60 million within three years.

The government claimed it has succeeded in doing without levying road toll-charges and assessment rates, which it abolished when it took over the state, and despite being deprived of a share of the oil royalty.

The state budget report, released yesterday, records the reduction of debt and lends weight to PAS' rebuttal of allegations by the federal government that Terengganu will default on what it owes.

Zahari Muhammad, the press secretary to Menteri Besar Abdul Hadi Awang, said allegations by Deputy Prime Minister Abdullah Ahmad Badawi that PAS has managed the state badly are thus not true.

Premier-in-waiting Abdullah said yesterday that PAS should start proving it could run the state better than the BN. He was criticising Abdul Hadi's statement that the state government would withhold repayment of its loans to the federal government due to financial constraints.

He also charged that PAS was trying to divert attention from its own weaknesses by blaming the BN for the Terengganu's failure to repay its loans.

Equal treatment

"How can they (BN) accuse us of being bad managers when our debt to the federal state is only RM60 million, which is much lower that the debts borne by other states like Johor and Kedah, each of whom owes the federal government about RM100 million?" Zahari said when contacted today.

He denied that PAS had been "whining and making excuses" for its alleged inefficiencies and inadequacies in managing the state.

Zahari clarified that Abdul Hadi had never blamed anyone for that, but was merely asking the federal government to treat Terengganu as it treats other states.

"Like Sabah and Sarawak, Terengganu produces oil. The difference is that they get oil royalty but we don't. Because of the unequal treatment, we are facing financial difficulties," Zahari said.

Prudent management

He also pointed out that the state, while under BN rule, had accumulated RM720 million in debt, despite receiving the annual RM820 million oil royalty from Petronas at the time.

"The staggering amount of debt hints of mismanagement and misappropriation by the previous government. Since we took over, we had to settle some problems like bad investments, and our thrifty efforts have proved successful," Zahari said.

If they were given the oil royalty, the full debt would be settled in a jiffy, he said with confidence.

"As Datuk Harun Taib (PAS' Ulama Council chief) said, with the oil royalty, we not only can settle the debt but can afford to lend the federal government some money, too!" he said.

Asked about the state government's refusal to settle its debt to the federal government, Zahari clarified that Abdul Hadi never said the state intends to default on payment. However, repayment will be deferred so that the money can be used to improve the quality of life of the people.

He said the state would never shirk from its financial obligations and that the debt would be settled in due course without neglecting the people's welfare and development. He cited as examples, "projects to build or upgrade roads and other basic amenities".

"Of course we don't have tall buildings because we don't need them. We make progress for the people, not the leaders," he added.