Malaysia's debt 'over $250 billion'

KUALA LUMPUR - Malaysia is saddled with over 1 trillion ringgit ($252 billion) in debt, Prime Minister Mahathir Mohamad said on Monday, blaming the previous government led by former leader Najib Razak who now faces domestic graft investigations.

Mahathir, 92, led an opposition coalition to a spectacular win over Najib's previously undefeated ruling alliance in a general election on May 9, having campaigned aggressively over people's rising living costs and a multibillion dollar scandal at state fund 1Malaysia Development Berhad, or 1MDB.

"We find that the country's finances, for example, were abused in a way that now we are facing trouble settling debts that have risen to a trillion ringgit," Mahathir said when speaking for the first time to staff of the prime minister's office.

"We have never had to deal with this before. Before we never faced debts higher than 300 billion ringgit, but now it has climbed to 1 trillion ringgit," Mahathir said. The government has set up a special task force that will look into possible criminal conduct of individuals involved in the management of 1MDB, Mahathir's office said on Monday.

In his first week in charge, Mahathir announced that a broad-based goods and services tax would be zero-rated from June 1, as his government works to replace it with a reinstated sales and services tax.

Mahathir had also promised to reintroduce fuel subsidies besides doing away with GST, all part of his coalition's pledge to tamp down rising living costs.

Mahathir's fiscal measures, however, would widen Malaysia's fiscal deficit and are credit negative without any offsetting measures, according to ratings agency Moody's.

Najib's government had planned to collect 44 billion ringgit ($11 billion) in 2018 in GST, about 18 percent of total revenue.

During the election campaign, Najib had warned that Mahathir's economic proposals would result in debt ballooning to more than 1 trillion ringgit.

Najib also rebutted opposition claims that federal debt had risen to alarming levels under his governance, and said that debt amounted to about 50.9 percent of its GDP at June 2017, which was below the government's limit of 55 percent.

Mahathir said last week that many of the figures recording the country's financial position may be false.

Malaysia's anti-graft agency has summoned Najib to give a statement on Tuesday in connection with a probe on SRC International, a former unit of 1MDB.

The summons came days after police raided six premises linked to the former prime minister as part of investigations into the state investment fund that Najib founded in 2009.

Among the items seized include 284 boxes of designer handbags and dozens of bags filled with cash and jewelry, from a luxury condominium in the center of Kuala Lumpur linked to Najib.

Najib has sought police protection over concern about his family's safety, Malaysia's national news agency reported on Sunday.

Reuters - Ap

(China Daily 05/22/2018 page11)