KUALA LUMPUR, Oct 11 – The government is committed to reduce its debt and liability exposure, and will continue to report a comprehensive position of its exposure to enhance monitoring and transparency.

In its 2020 Fiscal Outlook and Federal Government Revenue Estimates report, the Ministry of Finance (MoF) said as at end-June 2019, total federal government debt and liability exposure was estimated at RM1.17 trillion or 77.1 per cent of gross domestic products (GDP) due to increase in federal government debt and committed guarantees.

“Apart from the federal government debt, other obligations exposure are committed guarantees, 1Malaysia Development Bhd’s (1MDB) debt, and other liabilities, which include estimated cash commitments of public private partnership (PPP) and private financing initiative (PFI) projects,” it said.

On government guarantees, it said outstanding loan guarantees stood at RM273.8 billion or 18 per cent of GDP as at end-June 2019 compared with RM266.5 billion or 18.4 per cent of GDP as at end-2018.

The ministry said new disbursements under government guarantees were mainly to finance public infrastructure projects such as the Mass Rapid Transit, Pan Borneo Highway, as well as for civil servant housing loans managed by the Public Sector Home Financing Board and education loans under the National Higher Education Fund Corporation.

Meanwhile, due to mismanagement and poor governance, the government has to assume 1MDB’s entire obligations, including debt principal of RM32.2 billion.

However, the government has extended advance of RM8.9 billion to 1MDB for debt servicing as at end-June 2019.

The government is also in the pursuit of recovering several assets related to 1MDB’s financial trail whereby as at end-June 2019, it received about RM920 million from the recovered assets, which would be utilised to serve 1MDB’S debt obligations.

On other liabilities, it said outstanding PPP cash commitments are estimated at RM130.6 billion based on the existing 100 projects as at end-June 2019 from RM135.1 billion as at end-2018.

To serve these commitments, the government has allocated about RM9 billion, comprising availability, maintenance and asset replacement charges, as well as volume-based service payments of contracts up to 2047.

The liabilities in relation to PFI projects, on the other hand, were estimated at RM45.9 billion as at end-June 2019 and include projects such as construction, upgrading and maintenance of schools‚ public utilities and low-cost housing, as well as entrepreneurship and skills development programmes.

-- BERNAMA