'Finance Ministry must come clean on 1MDB borrowings'

Penang Chief Minister Lim Guan Eng has urged the Finance Ministry to come clean on the economic benefits and growth that Malaysians have derived from the RM38.4 billion borrowings by 1Malaysia Development Bhd (1MDB).

This, he noted, has only helped to increase the federal government debt to “70 percent” of Gross Domestic Product (GDP).

"Such huge unexplained loan guarantees by the federal government have caused Fitch Ratings to revise Malaysia’s credit outlook from stable to negative," Lim said in a statement.
  
In the national interest and to uphold principles of public accountability and transparency, he said premier Najib Abdul Razak - as finance minister - should issue a statement on the current status of 1MDB.   

Fitch has questioned the use of ‘off-balance-sheet funding’ through guaranteed government debt of almost RM150 billion, from RM502 billion to RM650 billion at the end of last year.

Lim said Fitch’s ‘negative’ credit outlook may impact negatively on Malaysia in the form of higher costs of borrowing and cause a higher inflationary effect.
 
He also said the government has understated its total debt obligations by not officially counting the “off-balance-sheet funding” as federal debt.

"If both official government debt and guaranteed debt are added, our federal total debt to GDP ratio would be 70 percent and not (the) claimed debt of 54 percent. (This) is illegal as it is above the statutory limit of 55 percent," Lim pointed out.
 
"Most of the guaranteed government debt is incurred by financial instruments such as 1MDB  (which has borrowed) US$12 billion or RM39 billion through bond issues.”

He said Malaysians have been left in the dark as to the management and status of the RM39 billion, and “especially whether 1MDB has made book profits which can be quickly realised into cash".
 
"Rumours of 1MDB being connected with young cronies of the BN leadership require a full accounting for such a huge public fund of RM39.5 billion, equivalent to nearly RM1,500 for every Malaysian man, woman and child,” he added.