RM39.7bil from govt went to pay 1MDB loans

KUALA LUMPUR: A total of RM39.74bil in Federal Government grants were used to repay the 1Malaysia Development Bhd (1MDB) loans and related payments over a five-year period, according to the Auditor-General’s Report 3/2024.

The grants were for principal repayment and other expenses, including bond interest and coupon payments.

Besides this, the Federal Government also had to set aside another RM9.46bil - RM5bil for the principal of Sukuk Islamic Medium Term Notes (IMTN), which matures on May 27, 2039 and RM4.46bil for IMTN coupon payments for the period from 2024 to 2039.

The report also noted that the Federal Government would have to repay RM5bil in committed guarantee related to 1MDB after 11 years.

According to the report, the Federal Government repaid 1MDB loans totalling RM13bil last year, a 749.7% increase compared to the RM1.53bil repaid in 2022.

The Auditor-General, among other things, recommended that the Federal Government recover assets related to 1MDB and SRC International Sdn Bhd from both domestic and foreign parties.

The recommendation included a proposal that the recovered assets be used to cover the debt repayment expenses of 1MDB and SRC companies as well as other debt expenses.

The report said this should be done, as Assets Recovery Trust Account would be closed by 2028 as stated under its trust directive.

The Auditor-General’s Report said the Federal Government’s debt was recorded at RM1.173 trillion in 2023, an increase of RM92.918bil or 8.6%, compared to RM1.080 trillion in 2022.

In the Report 3/2024 released on Monday, the debt consists of Domestic Loans amounting to RM1.143 trillion or 97.5% of the total Federal Debt, and Foreign Debt totalling RM29.851bil or 2.5%.

“Domestic Loans increased by RM92.580bil or 8.8%, while Foreign Debt rose by RM0.338bil or 1.1%.

“The Federal Liabilities position at the end of 2023 showed an increase, with the Federal Liabilities to GDP Ratio at 81.8% compared to 78% in 2022.

“This is due to the nominal GDP growth rate in 2023 being 1.6% slower compared to 15.8% in 2022. The Federal Debt to GDP Ratio in 2023 was 64.3%, up from 60.2% in 2022.

“Guarantee Commitments also increased by RM3.288bil or 1.5% to RM227.404bil compared to RM224.116bil in 2022,” the report stated.

The report also mentioned that to improve Federal Debt management, the government implemented fiscal reforms with the approval of the Public Finance and Fiscal Responsibility Act 2023 in Parliament on Oct 11 last year.

The report also advised that serious attention be paid to new borrowings.

This step is aimed at focusing on financing loan repayments that will mature, as the Federal Government needs to allocate funds to repay maturing loans totalling RM773.750bil over the next 10 years.

The targets are set for a deficit not exceeding 3% of GDP, national debt not exceeding 60% of GDP, and Financial Guarantees not exceeding 25% of GDP, aligning with fiscal objectives under Act 850, the report said.