GA Report: Rising National Debt Worrying Trend, Says PAC

KUALA LUMPUR: The increase in federal government debt is a worrying trend, according to the Public Accounts Committee (PAC) of Parliament.

PAC Chairman Wong Kah Woh said the latest Auditor General’s (LKAN) report on the federal government’s financial statements revealed that the federal debt in 2021 stood at RM978.8 billion, an increase 100 billion RM over the previous year.

“PAC is concerned about the growing trend of federal government debt which continues to rise each year.

“Federal government debt of RM979.8bil in 2021 represents 63.4% of gross domestic product (GDP).

“This is an increase of RM100 billion from 2020, when the federal government’s debt was RM879.5 billion.

“This increase has brought the total liability of the federal government in 2021 to RM1.298 trillion, or 84% of the country’s GDP,” Wong said at a press conference in parliament.

The PAC had been briefed on Auditor General Datuk Seri Nik Azman Nik Abdul Majid’s report earlier.

Wong said one of the concerns revealed in the auditor general’s report was how more than half of loans made in 2021 were used to service maturing loans.

“In 2021, the government provided gross lending amounting to RM217.2 billion, an increase of 11.6% from RM194.55 billion in the previous year.

“A total of 52.4% or RM113,764bil has been used for principal repayments of maturing loans.

“As for the total of RM62.317 billion transferred to the Development Fund, only RM40.994 billion (65.8%) was used for development expenditure purposes compared to RM37.53 billion (77. 3%) in 2020. So there is a decrease in terms of percentage.

“A total of RM12,612bil (20.2%) is used to cover the PFI (private finance initiative) liability and guarantee commitment.

“Another RM8.711bil (14%) is used for development operating expenditure classification purposes,” Wong said.

“Among them, the confirmation of records including the repayment of overdue loans with new loans, the reduction of the percentage of development expenditure, the increase in the federal debt and the different recognition of the principle of recognition of income in accounting modified checkout,” he added. said.

He said that in 2021, the government provided gross lending amounting to RM217.201 billion, an increase of 11.6% from RM194.55 billion the previous year.

“A total of 52.4% or RM113,764bil has been used for principal payment of maturing loans,” he said.

At the same press conference, Nik Azman said that borrowing money to service debts should only be a short-term measure.

“It is understood that loans are generally made to finance development expenditure.

“But because of the Covid-19 pandemic, about half of the loans are used for pandemic relief activities as well as economic generation to help affected businesses. This we can understand.

“But what worries us is that this sharp increase in debt cannot continue.

“This should only be a short-term temporary measure. The government must take corrective measures so that the debt situation is manageable and can be controlled,” said Nik Azman.

He pointed out that due to the increase in the national debt, the payment of interest has also increased – 16.3% of the collected revenue being used for this purpose.

“This means that for the RM1 revenue collected, 16 sen is used to pay interest. So this must only be a temporary measure and as auditors it is our duty to remind the government of this,” said said Nik Azman.

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