KUALA LUMPUR: The Federal Government has approved some RM24.15bil in loans to states as of Aug 31 this year, says the Finance Ministry
The Finance Ministry said the loans fall into four categories.
These are low cost public housing, water supplies, state economic development corporations and miscellaneous.
Water supplies made up the largest share at 58.12%.
This was followed by miscellaneous at 27.61%, low cost public housing at 7.84% and state economic development corporations at 6.43%.
The ministry said each loan undergoes a structured and detailed process.
This includes the loan period and reasonable rates, taking into account the Federal Government’s cost of funds.
It said this ensures state debts do not burden the country’s fiscal position.
“The loans must also undergo due diligence, including financial and non financial covenants,” it said in a written reply on Thursday (Oct 9).
This takes into account the borrower’s ability to repay the loan.
The ministry said the Federal Government is ready to restructure repayments if states face difficulties meeting schedules.
“Constant monitoring is carried out on related development projects,” it said.
This is to ensure completion on schedule and benefits felt by the rakyat.
The ministry was responding to Azli Yusof (PH–Shah Alam).
He asked about loans borne by state governments and guidelines to ensure state debts do not burden national finances.
