A-G’s Report: Govt still exposed to RM66b worth of debt owed by five Ministry of Finance Inc companies
KUALA LUMPUR, Oct 14 — The auditor-general (A-G) has urged Putrajaya to impose a ceiling on how much debt it can guarantee in a bid to rein in its staggering exposure to liabilities owed by government-linked entities.
The recommendation was made in the 2018 federal audit which found federal government-guaranteed debt as of December 31, 2018, to be at a colossal RM137.7 billion.
Out of the sum, RM66.341 billion is still owed by five Ministry of Finance Incorporated companies deemed to be high risk.
“Given that the federal government is allowed to guarantee loans under the Loans Guarantee (Bodies Corporate) Act 1965, these debts are due to mature by 2041, while another is due this year. The latter debt stood at close to RM100 million.
“Government-guaranteed debt accrued to the five companies totalled RM76.075 billion were approved by the previous administration,” the audit said.
“As of December 31, 2018, the balance of debt was RM66.341 billion which is due by 2041.”
The federal government was forced to approve a loan of RM2.839 billion as advance for debt payment for the five companies to prevent a cross default.
Some of it went into paying debt service charges accrued by subsidiaries of 1Malaysia Development Berhad (1MDB), the fund at the heart of a major financial embezzlement scandal involving former prime minister Datuk Seri Najib Razak.
The A-G report said the companies’ ability to repay the cash advance seemed doubtful.
“As provided under Section 8 of the Loans Guarantee (Bodies Corporate) Act 1965, companies are obligated to repay all sums given as advance by the Government,” it said.
“However, the ability of these five companies to pay back the advance remains uncertain.”
Earlier this year Finance Minister Lim Guan Eng revealed that the government’s contingent liabilities were up by RM28.3 billion to RM266.4 billion in 2018, on higher guaranteed loans across several statutory bodies and state-owned companies.
This included DanaInfra Nasional Bhd, which saw an increase of RM10.6 billion for the year, followed by the Public Sector Home Financing Board (RM6.3 billion), Suria Strategic Energy Resources Sdn Bhd (RM5 billion), Prasarana Malaysia Bhd (RM4.8 billion) and Malaysia Rail-Link Sdn Bhd (RM4.4 billion).
Lim said, out of the overall amount, RM124.5 billion were directly guaranteed debts for eight companies owned by Ministry of Finance (MoF) Inc namely, Assets Global Network Sdn Bhd, DanaInfra, Govco Holdings Bhd, Jambatan Kedua Sdn Bhd, Kuala Lumpur International Airport Bhd, Prasarana Malaysia, Malaysia RailLink and Suria Strategic Energy Resources.
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