NAJIB Razak’s government had circumvented official classifications of various financial committments in order to claim that the national debt was lower than RM1 trillion, DAP lawmaker Tony Pua said.

Accusing Najib the former prime minister of being in denial and of “spinning” over the true levels of federal government debt, Pua said the previous administration failed to take into account the true debt obligations in its official figure.

“The former prime minister was obviously trying to be disingenuous with words. Would not a rose by any other name, smell just as sweet? 

“Or more appropriately, a debt in any other name stink just as bad?” said Pua in a statement. 

The Damansara MP said government guarantees for subsidiaries under the Ministry of Finance had been “abused” by the previous government to “circumvent the ‘official’ classification as federal government debt”.  

“In the end, entities which are not able to service their federal government guaranteed debt would still require the federal government to step in to meet their obligations.  Is Najib telling Malaysians that just because the federal government is servicing these debts as a guarantor, they are not federal government debts?”

The previous administration had also abused the classification of “government guarantees” with lease payments for certain projects, such as RM42.2 billion to Danainfra Nasional for the Mass Rapid Transit construction, that would last the next few decades.

Another example, said Pua, was the RM38 billion in government guarantees for 1Malaysia Development Bhd.

“The fact that the Finance Ministry has been secretly servicing some RM7 billion or more of 1MDB’s debts to date, shouldn’t 1MDB’s debt be considered as federal government debt?” added Pua. 

He also highlighted abuse of public-private partnership (PPP) schemes, where construction contracts are awarded to private companies.

The Najib government did not pay directly for the project, but instead committed to making monthly lease payments, which Pua said came up to “three times the value of the project, or RM1.5 billion in this case, over the next 10 to 20 years”.

“The private company would then take this lucrative contract to the banks as collateral to secure the necessary financing to carry out the project.

“We were shocked when we discovered that the previous government had awarded more than RM63 billion worth of PPP projects, committing the government to RM201 billion of leasing payments over the next decades.”

Pua said all these were “hidden” from the government’s liabilities. They would also cost the government more than funding the projects with direct borrowings.

Pua, who is part of Finance Minister Lim Guan Eng’s team, was responding to Najib’s criticism’s of Prime Minister Dr Mahathir Mohamad and Lim’s announcements on the national RM1.09 trillion debt, which is 80.3% of gross domestic product (GDP).

Lim on Thursday had given a breakdown of the debt – RM686.8 billion of ‘official federal government debt’ (50.8% of GDP), RM199.1 billion (14.6%) of ‘committed government guarantees’ and RM201.4 billion (14.9%) of lease commitments via PPP projects. – May 26, 2018.