MoF: Kelantan receives most federal aid at RM913m, needs to buck up

Ida Lim
Finance Minister Lim Guan Eng urged the Kelantan state government to manage the state finances more responsibly and cut down its reliance on the federal government. ― Picture by Sayuti Zainudin

KUALA LUMPUR, Sept 8 — The Kelantan state government receives the highest amount of monetary aid from the federal government, totalling a whopping RM913 million to help it deal with its cash flow issues and even pay its staff, the Finance Ministry revealed today.

Finance Minister Lim Guan Eng urged the Kelantan state government to manage the state finances more responsibly and cut down its reliance on the federal government.

“With that, the Kelantan state government is the biggest recipient of financial deficit assistance and advance funds assistance from the Federal Government at a total of RM913 million,” he said in a statement today.

In the statement, Lim broke down the RM913 million figure into two categories, including the federal government’s assistance to state governments whose operating account deficits meant they have insufficient funds in the state coffers to pay for operating expenditure such as emoluments or wages, rental, utility.

The Kelantan state government received a total of RM363 million under this category, which Lim said was the highest among all the states in Malaysia.

Noting that state governments are responsible for practising prudent financial management to prevent their spending from exceeding state revenue, Lim pointed out that the Kelantan state government was the only one to have recorded a deficit in its operating account for more than five consecutive years.

“Without the assistance of Deficit Allocation from the Federal Government, the Kelantan State Government would not be able to pay for the emolument of the State Government’s staff,” he said, noting that only Kelantan and Perlis received such assistance for the year 2017.

He also provided the breakdown of the RM363 million sum received by the Kelantan state government during a five-year period, namely RM86.1 million (2013), RM95.1 million (2014), RM67.2 million (2015), RM59.9 million (2016), RM54.7 million (2017).

Apart from the RM363 million, the remaining RM550 million sum was what the federal government gave to the Kelantan state government as advance funds to help it with its cash flow problems.

Lim explained that the RM550 million came from a consolidated fund for Putrajaya to aid states with cash flow issues, highlighting that Kelantan was again the biggest recipient of such assistance.

Lim said Kelantan has yet to repay RM384 million out of the RM550 million advance it received from Putrajaya.

On top of the RM913 million figure, Lim said the federal government had also given the Kelantan state government a loan, with RM1,413.3 million or over RM1.4 billion unsettled as of June 30, and with arrears or overdue payments totalling RM434.5 million.

“The level of arrears of payment also shows the State Government’s inability to fulfil and manage its financial commitments.

“The Federal Government hopes that the Kelantan State Government will be able to manage the state’s financial affairs more responsibly and more prudently as stated by YAB Prime Minister Tun Dr Mahathir Mohamad and increase its revenue professionally and systematically to reduce reliance on the Federal Government,” he said.

Earlier in the statement, Lim said it was the federal government’s responsibility to continue to strive to improve financial administration and ensure all state governments comply with financial programmes, but also assured that all existing assistance would continue to be provided.

The Kelantan state government is under Opposition party PAS, while the federal government is under the ruling Pakatan Harapan coalition.

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