Prime Minister Abdullah Ahmad Badawi today denied reports that the government is seeking a US$50 billion (RM175 billion) loan from mostly foreign banks to help fund the Ninth Malaysia Plan (9MP).

Abdullah, who is also finance minister, told reporters that the projects under the 9MP will be financed through internal funding.

"I don't remember taking any loans. I am the minister of finance. We have money," he was quoted as saying by Bernama.

"I know this question comes up because people are accusing that we don't have enough money. We have enough money.

"It (the 9MP) will be implemented on the basis of the money we have set aside," he added when asked to comment on the report.

The premier was speaking to reporters after chairing the SME Development Council meeting at Bank Negara in Kuala Lumpur.

Asked whether Malaysia will face a recession this year and in 2008, Abdullah said the government is more confident that the economy will expand.

Dubious companies

The US$50 billion loan issue was first highlighted by the Malaysia Today blog, which also published several related documents.

It was said the government was seeking the money via two 'dubious' companies. These are local firm Asasatu Technology Sdn Bhd - which is heavily in debt and in the process of being wound up - and Australian company Project Equity Services Group (PESG), a little-known firm based in Sydney.

A third Australian company, the Union Financial Services Corporation, is also said to be involved in the transaction.

The two foreign companies are owned by Roland Bleyer, who has been accused of being involved in a number of business scams.

Among the documents published was a letter allegedly sent to Bank Negara deputy governor Zamani Abdul Gani by Abdullah's aide Reezal Merican Naina Merican dated June 15, 2006.

Among others, Reezal said Asasatu managing director Zubir Ahmad had met with the premier two weeks earlier.

He said Abdullah "had been made to understand that this company [Asasatu] is working with a fund management company [Union Financial Services Corporation] to bring in foreign funds into this country."

"In principle, the prime minister has no objections for this proposal to be considered," he added.

On Monday, malaysiakini reported Opposition Leader Lim Kit Siang asking if Bank Negara had approved the transaction.

The veteran politician also raised three key questions which he said Abdullah must explain "in the name of accountability, transparency, integrity and good governance."