PETALING JAYA: Efforts to carry out more efficient management of overpriced projects were why the Federal Government has been successful in reducing the nation’s overall debt and liabilities, says Lim Guan Eng.
The Finance Minister said one example was the government’s ability to control and reduce its overall debt and liabilities to 75.4% of the GDP in 2018 from 79.3% in 2017, as announced by the newly-established Debt Management Committee.
Although he acknowledged that there was a rise in direct government debt, he said the 3.9% drop in overall government debt and liabilities was due to successful cost rationalisation of both overpriced mega projects and Public Private Partnership (PPP) payments.
“The Federal Government’s debt and liabilities would have risen higher were it not for various cost rationalisation efforts done by the present government on the ECRL, MRT2, LRT3 and other mega projects,” Lim said in a statement yesterday.
He cited renegotiations helped the government to shave off RM15.02bil for the Light Rail Transit 3 project (LRT3), RM8.8bil for the Mass Rapid Transit 2 line (MRT2) project and RM21.5bil for the East Coast Rail Link (ECRL) projects.
“Yet another example is the cancellation of the two pipeline projects under Suria Strategic Energy Resources Sdn Bhd (SSER), in which 88% of the RM9.4bil total cost has been paid despite only 13% of work purportedly done,” he said.
Lim noted that the largest contributor to the decline was the 6.8% reduction in PPP payments which were incurred under the previous administration which fell to 15% last year compared to 21.8% in 2017.
He said that committed government guarantees rose by 1.8 points to 9.2% of the GDP in 2018 from 7.4% in 2017.
“The rise in committed government guarantees was caused by the continuing payments for various existing infrastructure projects,” he said.
Lim said the government would continue to reduce its overall debt and liabilities, and not just the direct debt component.
“The government’s newly-established Debt Management Committee is pressing on with its fiscal consolidation exercise to slow down the growth of direct government debt, without affecting the economy’s growth,” he said.
He added that this exercise, along with cleaner and better governance, would help reduce the overall debt and liabilities of the government further in 2019 and beyond.