The DAP publicity chief said it was worrying that the limit had been raised twice since April 2003 to “legalise” federal debt levels, which were growing at a much faster rate than the country’s GDP.
He noted that the current limit of 55 per cent of GDP came into effect in July 2009 by order of the second finance minister, only 13 months after the limit had been raised to 45 per cent of GDP from 40 per cent.
“The question is if the ceiling is repeatedly raised with such nonchalance, why did the government bother setting a limit at all?” he said in a statement.
“Given that our debt level is expected to increase beyond 55 per cent over the next two years, are we expecting the federal government to once again raise the ceiling in Parliament to circumvent the breach?”
Pua claimed yesterday that Putrajaya had not reported RM96.9 billion in loans it has guaranteed as public debt, which would push the amount of federal loans above the 55 per cent of GDP allowed by law.
The combined public debt of RM455.7 billion last year and such “off-balance sheet” financing would total RM552.6 billion, or 65.2 per cent of the economy, the Petaling Jaya Utara MP said.
Pua also said today the government was using a “loophole” in financial reporting standards to continue racking up debt, in contravention of the Loan (Local) Act 1959 and Government Funding Act 1983.
He said the RM20 billion the Finance Ministry will raise via unit Dana Infra to fund the Klang Valley Mass Rapid Transit (KVMRT) will not be included in the federal debt, even though it will be guaranteed by government.
“The debt raised will not be part of the federal government debt (because Dana Infra is ‘not’ part of the federal government) and, hence, will not be perceived to jeopardise our credit standings,” he said.
“This is despite the fact that all parties are expecting the MRT to be a financially loss-making project and that the federal government will have to fund Dana Infra’s debt repayments at some point in the future.”
Such “creative manipulation” also extended Pembinaan BLT’s construction of 74 police headquarters and the proposed RM20 billion sukuk by Pengurusan Aset Air Bhd (PAAB) to restructure the country’s water assets, Pua said.
He added that while most governments the world over were now changing their laws to require such debts and contingent liabilities to be incorporated into the federal financial statement, Malaysia appeared to be bucking the trend.
“The Malaysian government is still sitting back and resting easy... making full use of the ‘loophole’ in our government financial reporting standards to continue to recklessly indebt future Malaysians with none of the checks put in place,” he said.
