The National debts owed by the Federal Government until 30th of June 2011 was RM437.2 Billions according to a reply made by the Finance Minister Datuk Seri Najib Tun Razak to a Parliament question raised by me on the 12th of October, 2011.
Najib further said that out of the total debts a big portion of the debts is owed by the Federal government internally in the country amounting to RM421 billions (96.3% of total), and only RM16.2 billion (3.7% of total) is actually the foreign debts owing.
Sabah owed the Federal government a sum of RM2.6 billion as at 31st of December 2011.
While the National debts under the external debts consists of debts over the medium and long term for the federal government, from non financial public enterprises and the private sector, and as well as the short-term debts with private banking sectors. The percentage of the National debts to the Gross National Income in 2011 remains manageable with an increase to RM241.7 billion or 29.5% of the gross national income from RM227.1 billion in 2010, 30.7%. This increase was due to the increase in the short term loans as well as the medium and long term loans committed by the private sectors.
The measures to reduce the debts are as follows:-
To ensure there is sufficient revenue to cover operating expenditures, and the government loans are solely used to finance development expenditure, to increase revenue obtained through the development of economic activities, and to improve on compliance, enforcement and proper tax administration.
To control expenditure, and ensuring the provision is spent wisely, efficiently and effectively to avoid waste. The loans for development expenditure devoted to high-impact projects will provide returns to the country. The implementation on the rationalization subsidies will be continued to ensure that benefits can reduce the annual subsidies on the government spending.
To increase the public/private partnership program especially for high-impact project like the high-speed broadband project, regional development corridor and public infrastructure development to improve the fiscal position without prejudice to the objective of a comprehensive growth and development.
To implement a comprehensive debt monitoring system with the authorities and closely monitor the level and structure of the debts, write off debts, and the obligation as a whole. For external debts, the monitoring system as a whole enables early detection of risks and vulnerabilities arising from the foreign debts exposure as a whole, and
To continue the current policies of the government’s priority to domestic loans that do not cause inflation, and taking into account the higher liquidity and lower borrowing costs.
The government is committed to fiscal consolidation to reduce the deficit in stages, which in turn will reduce the need for government to borrow. In terms of the private sector loans.
In terms of private sector loans, the Bank Nagara approval is needed for foreign external loan exceeding RM5 million. The approval on the loans is given to finance productive activities as well as strategic projects and for investments that will generate enough foreign exchange to pay the debt.
More such loans from the Federal government should be granted for the Sabah business sectors to enable them to embark on to industrial, agriculture, and tourism development projects. The loan interest must be charged at a low and special rate to encourage more future development both in the private and public sectors. Sabah must be given prime attention and due consideration to enhance economic growth.
***Media statement by Dr. Hiew King Cheu MP for Kota Kinabalu