PRIME Minister Tun Dr Mahathir Mohamad, Finance Minister Lim Guan Eng and the new Cabinet must be congratulated for revealing officially and publicly that our national debt is as high as RM1087bil or more than one trillion ringgit for the first time in our history.
The prompt and transparent manner of this revelation so soon after the Pakatan Harapan government took over, after 60 years of Barisan Nasional rule, is impressive.
This is particularly so because the government guaranteed loans to government-linked companies (GLCs), public private partnerships (PPPs) and other public sector entities were never fully revealed or clearly explained to the public in the past 60 years. Hence, this dreadful revelation is a most welcome tribute to transparency and accountability and shows a definite move towards greater integrity and the adoption of more good governance in the new Malaysia!
We can only hope that the Pakatan government will carry on with this high commitment to good governance persistently and consistently in the future. Otherwise, it will also face severe criticism, as evidenced by the strong and unprecedented reaction to the previous government’s poor performance in and indifference to good governance.
How dreadful is the national debt?
Firstly, the official debt of the federal government itself is given as RM686.8bil or 50.8% of the GDP. This is regarded as acceptable by international standards by the World Bank, International Monetary Fund (IMF) and also the rating agencies. No one has found it necessary to sound alarm bells that our debt is dreadfully high at this stage.
It’s manageable now although we have been advised to be more cautious as it can easily get out of hand in the wrong hands.
What is worrisome, however, is the revelation that several government agencies like 1MDB have defaulted in settling the capital and interest of their government guaranteed loans. This already amounts to a staggering RM199.1bil (or 14.6% of GDP), according to the alert and open Lim.
The question now arising in the public’s mind is how these public entities lost such huge sums of money and who are responsible for the mismanagement of our tax money since we will have to pay through our noses to bail them out.
The real debt now is therefore estimated to be RM885.9bil, which is 65.4% of our GDP, and definitely not RM686.8bil or 50.8 % of our GDP as we were told before. These figures should have been highlighted to the public much earlier, hence we have been somewhat misled into believing that our debt was lower. The World Bank and IMF strangely kept quiet as well, unless they warned the government privately. But these international institutions have a duty to be transparent to the public too!
What should be done to deal with this rising national debt?
Firstly, we should review and revise all our government guarantees to all kinds of entities, for instance DanaInfra Nasional (RM42.2bil), Malaysia Rail Link (RM14.5bil) and 1MDB (RM38bil).
The balance of RM201.1bil, guaranteed as lease payments for the PPP list of development projects, should also be reviewed for feasibility and viability before they become liabilities too. If some projects were given to under-qualified contractors or cronies, then they must be carefully monitored for possible failures, and the sooner the better.
The national debt policy must be reviewed and revised, and monitored more closely to prevent the mistakes of the past and avoid falling deeper into debt. There has to be a new debt policy that will be comprehensive and transparent for the rakyat to appreciate and approve!
TAN SRI RAMON NAVARATNAM
Asli Center of Public Policy Studies