The government's repeated denials that public funds would be used to resolve 1MDB's debt issues were untenable, said PKR vice president Rafizi Ramli.

He explained that since 1MDB's "rationalisation" exercise in 2015, the company's assets have been transferred to the Finance Ministry Inc (MOF Inc).

"It is very obvious that 1MDB has exhausted of its fund, 1MDB's asset was transferred to MoF Inc while its debt guaranteed by the government. It's a shell company with no asset," he said.

"So, one way or another, it will end up using public funds (to repay debts)," he said when met at the Kuala Lumpur court complex today.

In view of this, Rafizi challenged Second Finance Minister Johari Abdul Ghani, who claimed that public funds will not be used to repay 1MDB's debt to Abdu Dhabi's International Petroleum Investment Company (IPIC), to prove otherwise.

1MDB failed to meet its July 31 deadline to pay IPIC US$602 million owed and interest costs.

Following this, IPIC agreed to extend the deadline, on condition that 1MDB pay US$310 million by Aug 12.

Rafizi warned that missing the July 31 deadline would have already affected Malaysia's sovereign debt rating.

He also believed that Prime Minister Najib Abdul Razak would likely raise money through the bond market to pay the debt, which will ultimately be borne by tax payers.

Concurring, DAP lawmaker Tony Pua said the government, through the Finance Ministry, had helped 1MDB repay its debts numerous time.

This included an RM800 million loan from The Social Security Organization (Socso) and RM2.4 billion 1MDB bond, according to Pua.

"This is an example that Johari had lied," he told a press conference at Parliament today.

The Public Accounts Committee (PAC) has found that the loans were not used for its initial purpose to develop both Bandar Malaysia and TRX City, he added.

A total of RM741 million of public funds was used to refund Iskandar Waterfront City Bhd after Bandar Malaysia land deal called off, Pua further said. 

"This shows that the Finance Ministry settled 1MDB's debt obligation, as these properties were sold to the ministry's subsidiaries at a higher price, whereas 1MDB purchased them at a lower rate.

"We fear that 1MDB may not be able to resolve its debt. We hope Johari will refrain from issuing false statements," he added.