The Finance Ministry must come clean on the economic benefits and growth to Malaysians derived from the RM38.4 billion in borrowings of 1MDB
The Finance Ministry must come clean on the economic benefits and growth to Malaysians derived from the RM38.4 billion in borrowings Of 1Malaysia Development Bhd(1MDB), that has helped to increase the federal government debt to 70% of Gross Domestic Product(GDP). Such huge unexplained loan guarantees by the Federal government has caused Fitch Ratings to revise Malaysia’s credit outlook from “stable” to “negative”.
Fitch has questioned the use of “off-balance-sheet funding” through guaranteed government debt of almost RM 150 billion, that has increased the official government debt of RM 502 billion to RM 650 billion at end 2012. Fitch negative credit outlook on Malaysia may impact negatively on Malaysia in the form of higher costs of borrowings and cause a higher inflationary effect.
The Malaysian government understates the federal government’s total debt obligations by not officially counting the “off-balance-sheet funding” as Federal Government debt. If both official government debt and government guaranteed debt are added together, our federal government total debt to GDP ratio will be 70% and not its claimed debt of 54%, which is illegal as it is above the statutory limit of 55%.
Most of the guaranteed government debt is incurred by financial instruments such as the 1MDB borrowings of US 12 billion or RM39 billion through bond issues. To-date, Malaysians are left in the dark as to who is the management and the status of the RM 39 billion in borrowings guaranteed by them, especially whether 1MDB have made book profits which can be quickly realised into cash.
Rumours of 1MDB being connected with young cronies of the BN leadership requires a full accounting for such a huge public fund of RM 39 billion or equivalent to nearly RM 1,500 for every Malaysian man, woman and child. In the national interests and to uphold principles of public accountability and transparency, there should be a Ministerial statement by Datuk Seri Najib Tun Razak on the present status of 1MDB.
