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Malaysian PM says may impose cap on government guarantees

Prime Minister Tun Dr Mahathir Mohamad speaks during the launch of Bank Negara Malaysia’s National Strategy for Financial Literacy 2019-2023 at Sasana Kijang in Kuala Lumpur July 23, 2019. — Picture by Firdaus Latif. Sketched by the Pan Pacific Agency.

Pan Pacific Agency | COMMUICATION AGENCY FOR PACIFICA REGIONS

KUALA LUMPUR, Jul 23, 2019, MalayMail. Putrajaya will be looking into setting a ceiling for government guarantees on public projects, Tun Dr Mahathir Mohamad said today. The prime minister said that there should be a maximum figure on the sum that the federal government can guarantee for a project, reported the MalayMail.

“There should be a limit on the amount that the government can guarantee.

“In the case of loans taken by the government it should not exceed 55 per cent of the GDP. But for guarantee there is no limit. As a result, we see some of the guarantees amounting to a very big sum like RM42 billion and all that,” he told reporters after launching the National Financial Literacy Strategy 2019-2023 here.

He was referring to the projects undertaken by sovereign investment 1Malaysia Development Berhad when Barisan Nasional was in power that became a global scandal and which the Pakatan Harapan government has blamed for putting the country in massive debt.

On July 17, the Special Parliamentary Select Committee on the Budget had confirmed that the nation is RM1.09 trillion in debt.

The committee’s chairman, Datuk Seri Mustapa Mohamed said that out of the figure, RM132.7 billion are government guaranteed loans.

Among the top government guaranteed borrowings are a RM52.74 billion guarantee granted to DanaInfra Nasional Bhd to fund the Mass Rapid Transit (MRT) project and the Pan Borneo Highway, RM18.86 billion for Malaysia Rail Link Sdn Bhd for the East Coast Rail Link (ECRL) and RM31.41 billion for Prasarana Malaysia Bhd for the infrastructure and operations of the light rail transit (LRT) and Rapid KL.

Other notable guarantees granted were RM3.6 billion for SRC International Sdn Bhd, a former subsidiary of 1Malaysia Development Bhd (1MDB), for investments in strategic sectors and a RM5 billion guarantee for 1MDB.

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