Why grade debt-ridden BN govt better than current one? PM asks rating agencies

Terence Tang
Tun Dr Mahathir Mohamad speaks to reporters during a press conference at Al-Bukhary Foundation in Kuala Lumpur April 19, 2019. — Picture by Shafwan Zaidon

KUALA LUMPUR, April 19 — Tun Dr Mahathir Mohamad said today he is puzzled by global rating agencies for potentially downgrading Malaysia’s credit rating for bailing out the ailing Federal Land Development Authority (Felda) and Lembaga Tabung Haji (TH).

The prime minister said the previous Barisan Nasional (BN) administration was saddled with debts and liabilities but was still viewed in a better light by those agencies.

“The rating agencies say that giving RM6 billion to bail out a company is wrong and they may downgrade Malaysia, but when Malaysia owed RM1 trillion, they didn’t talk about downgrading,” he told the press here.

Yesterday, rating agency Moody’s Investors Service said in a note that Malaysia’s debt burden has reached above the median of A-rated sovereigns, due to the RM6.23 billion bailout of Felda.

Meanwhile, global index provider, FTSE Russell is considering the possibility of dropping Malaysia from the FTSE World Government Bond Index, citing concerns over market liquidity.

“Well, I suppose rating agencies have their own criteria but what is a fact is that the previous government owed huge amounts of money that will cause a deficit for years and years in the budget but they retained the ratings.

“But now that we are trying to solve this problem, we are told that this is the wrong move,” Dr Mahathir said.

He said Putrajaya had even tackled four of its major problems inherited from BN: The East Coast Railway Link (ECRL) project, Felda, Tabung Haji, and now Bandar Malaysia.

Putrajaya had earlier announced that the Bandar Malaysia project has been reinstated.

The prime minister had earlier said he believed Putrajaya can recover most of the investment involving ECRL.

“We are looking to reduce the cost further and we have other means to reduce the cost along the way,” he said.

He also said that Putrajaya will now have two more years to think about the Kuala Lumpur-Singapore High Speed Railway project.

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