KUALA LUMPUR,. Rating agency, Moody’s Investors Service, in its report, did not reveal the true extent of government debt, said Finance Minister Lim Guan Eng.
The Moody’s report today said recent developments such as the proposed abolishment of the Goods and Services Tax (GST), reintroduction of fuel subsidies and 1MDB’s debt level, might adversely affect Malaysia’s credit rating.
“Moody’s said the direct government debt was RM687 billion and we’ve never denied this.
“This itself shows that they (Moody’s) are aware of government guarantees which have become direct double-debts. This should also be taken into account, when you reveal the true extent of government debt.
“I would reject former Prime Minister Datuk Seri Najib Razak’s claim that our debt level is not at RM1.087 trillion,” he told reporters after attending a breaking of the fast event organised by Country Heights Holdings Bhd here today.
Lim said the Federal government’s debt is at this level because the current government wants to include these contingent liabilities which have now become direct debts.
“For instance, 1MDB’s debts are in the form of guarantees and since 1MDB is insolvent, they cannot pay and the government has to. Why don’t you call a spade, a spade, as these are government guarantees which have become direct debts,” he added.
He said the Moody’s report showed there are positive and negative impacts.
“It comments on the removal of the GST, as taking away a revenue source, but at the same time the government is replacing it with the Sales and Services Tax (SST).
“However, they also said by removing the GST, it will also be encouraging consumption. With increased consumption, it will help spur the economy,” Lim added.
Meanwhile, at the event, essential household provisions were handed over to 844 families and another 156 students from orphanages.
Altogether 1,000 special goodie bags were distributed to needy recipients and schools from several states.