Are support letters adding to unrecorded debts?
Ram AnandPublished: Nov 12, 2014 12:00 PM | Updated: Nov 12, 2014 10:09 PM
Pakatan Rakyat lawmakers today questioned if the government is using support letters to accrue more debts that are not recorded as official debts.
Recently, Pakatan revealed that the government had issued a support letter to undertake a RM9.6 billion borrowing by 1Malaysia Development Bhd (1MDB).
Pakatan Rakyat lawmakers today questioned if the government is using support letters to accrue more debts that are not recorded as official debts.
Recently, Pakatan revealed that the government had issued a support letter to undertake a RM9.6 billion borrowing by 1Malaysia Development Bhd (1MDB).
However, this undertaking was not listed as the government's contingent liabilities, with the government insisting that the support letter is not a form of debt guarantee.
"We want to know how many more support letters like this are there? I'm sure this is only the tip of the iceberg," PKR's Pandan MP Rafizi Ramli told a press conference at the Parliament lobby.
He was accompanied by PAS Shah Alam MP Khalid Samad, and DAP's Petaling Jaya Utara MP Tony Pua.
“Because of the 55 percent debt ceiling, BN is using other government-owned vehicles or private finance initiatives to raise debts,” he said.
“I am confident there are many more such support letters out there, such as the PKFZ case (also a support letter),” he added.
He said that Malaysia had faced a downgrade in sovereign rating before, and due to this exercise, the debt financing and interests will also increase.
“If the deputy finance minister does not know what is happening to 1MDB, who actually knows what is happening in it?” he asked.
Pua, meanwhile, asked the government to “stop playing with semantics”.
“The RM 9.6 billion has to be recorded in the government’s contingent liabilities regardless of whether it is named as a guarantee or not because the government has an obligation (to pay),” he said.
The government’s contingent liability is recorded at RM157 billion as of December 2013, on top of the national debt, which stands at 52 percent of the Gross Domestic Product (GDP).
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Recently, Pakatan revealed that the government had issued a support letter to undertake a RM9.6 billion borrowing by 1Malaysia Development Bhd (1MDB).However, this undertaking was not listed as the government's contingent liabilities, with the government insisting that the support letter is not a form of debt guarantee.
"We want to know how many more support letters like this are there? I'm sure this is only the tip of the iceberg," PKR's Pandan MP Rafizi Ramli told a press conference at the Parliament lobby.
He was accompanied by PAS Shah Alam MP Khalid Samad, and DAP's Petaling Jaya Utara MP Tony Pua.
“Because of the 55 percent debt ceiling, BN is using other government-owned vehicles or private finance initiatives to raise debts,” he said.
“I am confident there are many more such support letters out there, such as the PKFZ case (also a support letter),” he added.
He said that Malaysia had faced a downgrade in sovereign rating before, and due to this exercise, the debt financing and interests will also increase.
“If the deputy finance minister does not know what is happening to 1MDB, who actually knows what is happening in it?” he asked.
Pua, meanwhile, asked the government to “stop playing with semantics”.
“The RM 9.6 billion has to be recorded in the government’s contingent liabilities regardless of whether it is named as a guarantee or not because the government has an obligation (to pay),” he said.
The government’s contingent liability is recorded at RM157 billion as of December 2013, on top of the national debt, which stands at 52 percent of the Gross Domestic Product (GDP).
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