Guan Eng says Mahathir and Daim were wrong in “hiding” the country’s debts
The concept of PFI or PPP has been used all over the world since the 1980s. In Malaysia, when Dr Mahathir was Prime Minister and Daim Zainuddin the Finance Minister, followed by Anwar Ibrahim, PFI/PPP were being used to finance development projects.
THE CORRIDORS OF POWER
Raja Petra Kamarudin
Guan Eng says Mahathir and Daim were wrong in “hiding” the country’s debts
It is almost 40 years now that the world, Malaysia included, has been using Private Finance Initiative (PFI) or Public Private Partnership (PPP) to finance projects. Today, Lim Guan Eng says the PFI or PPP system is meant to hide the country’s debts.
The concept of PFI or PPP has been used all over the world since the 1980s. In Malaysia, when Tun Dr Mahathir Mohamad was Prime Minister and Tun Daim Zainuddin the Finance Minister, followed by Anwar Ibrahim, PFI/PPP were being used to finance development projects.
The reason PFI or PPP are used in the first place is so that it does not get treated as debts in the balance sheet. And Guan Eng suggests that this tantamount to fraud. Can Guan Eng alone be right while the entire world is wrong? Is Guan Eng saying Mahathir and Daim were wrong for introducing PFI/PPP to Malaysia back in the 1980s?
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Finance Minister Lim Guan Eng says the previous administration had kept under wraps a ‘substantial portion’ of debt and liabilities.
(FMT) – The finance ministry today attributed the increase in direct debt to 51.2% of the GDP last year from 50.1% in 2017 to Putrajaya’s refusal to resort to off-balance sheet financing “to cover up dubious debts”.
Off-balance sheet refers to items that are effectively assets or liabilities but do not appear on the balance sheet.
Finance Minister Lim Guan Eng said Malaysia had accumulated RM1.087 trillion in debt and liabilities as at the end of 2017, a “substantial portion” of which comprised hidden debt and liabilities that the previous administration had “deceitfully kept under wraps or disguised as off-balance sheet items”.
He said this included the RM38.3 billion worth of 1MDB debt which the Barisan Nasional government was secretly servicing.
The other liabilities amounting to RM260.1 billion involved off-balance sheet government expenditure masked as “Public Private Partnership (PPP)” or “Private Finance Initiatives (PFI)”.
“However, the financial cost, risks and obligations of these projects lie entirely with the federal government.
“Hence, the PPPs and PFIs were abused by the then BN government to give the false perception of low budget deficits, and a corresponding lower level of perceived debt,” he said in a statement.
Lim said, however, that the Pakatan Harappan government had significantly reduced the nation’s total debt and liabilities from 79.3% of the GDP as of Dec 31, 2017 to 75.4% a year later.
