PTPTN debts: Taxpayers’ burden increasing

The higher education loan programme is taking the bulk of the increasing federal-guaranteed debt, the 2011 AG report revealed

KUALA LUMPUR: Federal loans taken by the National Higher Education Fund Corporation (PTPTN) have more than doubled, amounting up to a whopping RM20.35 billion in 2011, according to the Auditor-General’s report.

The alarming rate of cash taken by the government-linked fund could strengthen opposition claims that the programme is on the verge of stumbling due to poor loan repayments by the vast number of students struggling to find employment.

The rise in government-guaranteed debt owed by PTPTN is part of a larger worrying picture of growing loans owed to Putrajaya which passed the RM100 billion mark for the first time last year to RM116.7 billion in total.

That is a staggering 69% or RM47.52 billion increase since 2008 amid concerns of rising federal debt-to-GDP ratio which hovers just below the 55% ceiling.

Analysts have warned Malaysia risked alienating investors as rating agencies threatens to further downgrade its sovereign credit rating if Putrajaya delays implementing necessary fiscal reform needed to rein in its growing debt.

PTPTN’s borrowings took up almost 17% or RM20.35 billion from the total of loans given out, more than doubled from the RM7.5 billion it took in 2007.

The report noted that this was the highest increase among all federal government-guaranteed borrowers.

A projection done by the opposition showed the corporation could be RM177 billion in debt by 2020, with the bulk coming from financing private education loans.

PKR strategic director Rafizi Ramli said the projected figure was based only on the current approval rate and said the actual amount could be higher.

The PKR leader is now spearheading a campaign for free education and the abolition of PTPTN in a bid to tap into the growing frustration among lowly employed youths saddled with PTPTN debts.

The demographic forms close to half of the country’s electorate and the higher education loan debate could be one of the major factors that could bolster opposition chances in the coming election.

Government leaders described the campaign as irresponsible and impractical, saying the move would put Malaysia’s finances in ruins but the opposition claimed prudent fiscal management can help fund its free education plans.

Past reports showed Putrajaya had lost billions of ringgit to corruption despite pledges to fight graft by Prime Minister Najib Razak when he took office in April 2009.