'EPF-for-housing-loan a ploy to hide national debts'

Pakatan Rakyat members of parliament again urged the government to stop using the public's savings in the Employee Provident Fund to fund Barisan Nasional's politically motivated programmes.

In a joint statement, Petaling Jaya Utara MP Tony Pua and Lembah Pantai MP Nurul Izzah Anwar accused the government of manipulating the home loan plan for low-cost and affordable housing schemes, saying it was trying to cover up spiralling national debts and a ploy to hide its debt exposure by issuing government guarantees instead.

“Instead of issuing debt papers, the MoF is attempting to hide its debt exposure by issuing government guarantees instead. Therefore, the EPF is being asked to lend RM1.5 billion to those who failed to secure loans from banks, and the loans will be in some form 'guaranteed' by the Federal government. This way, the RM1.5 billion will not be reflected as an increase Federal government debt,” they said.

According to the duo, conventionally, welfare programmes should be financed by the Federal government through tax revenues, and when insufficient, bonds could be issued to cover the budget’s deficit hole.

“Again under normal circumstances, EPF could subscribe to the bonds issued by the Federal government, hence in effect lending to the Federal government,” said Pua and Izzah.

Direct help for housing

They said it was strange for the Federal Territories and Urban Well-Being minister Raja Nong Chik Nong Zainal Abidin to announce that EPF would be used to give loans directly to those who failed to secure commercial loans to purchase their houses.

“The difference between the two approaches is that the Federal government is considered a low-risk borrower and hence the contributions by Malaysian workers to the EPF are considered safe, while the loans to those who failed to obtain commercial housing loans are considered very high-risk borrowers,” the statement added.

As such, the government’s refusal to issue bonds to EPF as it would normally do in this matter had raised suspicion that something was amiss.

“We can only conclude that the government did not want to borrow directly from EPF, and instead passed the buck to EPF to lend directly to the low-cost housing purchasers because the government does not want to further increase further to its much criticised and already high debt levels.

"The Federal government debt has reached RM456 billion as at the end of 2011, which is a 88.4% increase from RM242 billion 5 years ago in 2006,” the duo said, warning that national debts would rise further with mega projects such as the RM53 billion Klang Valley MRT and the RM7.1 billion West Coast Expressway.

Pua and Izzah also pointed out that federal government is using “off-balance sheet financing” to hide from public view its total debt exposure.

“In fact, as at the end of 2010, the government’s contingent liability - i.e. loans which were 'guaranteed' by the government but are not directly part of the federal government debt - has reached RM96.9 billion in 2010, which is a sharp 14.9% increase over RM84.3 billion in 2009,” they said.

Reminding the Ministry of Finance of its role to safeguard investments by EPF, the duo urged Nong Chik to come clean on why the government could not directly finance housing for the poor.

“The MoF must solve its own financial problems and not for the Malaysian workers to bear the burden of the BN government’s follies,” they stressed.

-Harakahdaily