Auditor-general moots new caps to tackle off-balance sheet debt

Modified 14 Oct 2019, 10:48 am

In an effort to tackle off-balance sheet debt, Auditor-General Nik Azman Nik Abdul Majid has mooted new caps for government guarantees.

"My advice, as an auditor, is on top of the 55 percent debt-to-GDP ceiling, we could add another 10 percentage points of ceiling for government guarantee to viable projects, and another five percentage points of ceiling for riskier debts from government-owned companies.

"Because currently, we have no limit to cap the government guarantee. So the overall debt-to-GDP ceiling would be 70 percent, but including the guarantees provided by the government," Nik Azman (above) was quoted as saying by The Edge.

Off-balance sheet debts are liabilities that are not mentioned in the government's official budget.

In the government's 2018 financial statement, it said that RM2.839 billion had been spent on servicing government-guaranteed loans for five special purpose vehicles.

The five were KL International Airport Bhd, GoVco Holding Bhd, Asset Global Network Sdn Bhd, Jambatan Kedua Sdn Bhd, and Danainfra Nasional Bhd.

The five still have RM66 billion of government-guaranteed loans that need to be serviced, which mature in 2041, except KLIA Bhd's loan with a balance of RM94.38 million which matures in 2019.

The audit department in response to this said the government should introduce a cap on government guarantees to avoid further increasing the national debt.

As at end 2018, the federal debt was at RM741.049 billion, while federal commitments were at RM280.171 billion, bringing total government debt to RM1.021 trillion.

Besides the five SPVs, about RM17 billion of the commitments as of end 2018 were for companies linked to former prime minister Najib Abdul Razak, namely 1MDB (RM5 billion), SRC International (RM3.6 billion), TRX City Sdn Bhd (RM485 million), and Suria Strategic Energy Resources Sdn Bhd (7.925 billion).

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