TALK that Putrajaya has raised more debt and will miss its deficit target this year is untrue, Finance Minister Lim Guan Eng said.

He said the government is on track to meet its deficit target of 3.4% for 2019, which comes from the RM52 billion worth of net direct debt raised for development expenditure purposes this year.

The expenditure amount was planned in the Budget for 2019 tabled last year and translates into 3.4% of GDP for this year.

“Allegations that the net direct debt raised to date, or RM58 billion as of September 26, 2019, has already exceeded the budgeted RM52 billion for the full year are baseless and false.

“The government is on track to meet the 3.4% target, which is lower than the 3.7% of GDP fiscal deficit or RM53 billion recorded in 2018. The funds raised are entirely allocated for the purposes of development expenditure such as roads and infrastructure for the public,” he said in a statement today.

He said the RM58 billion net direct debt that has been raised to date, will not be the actual figure for 2019, as the government issues and redeems its debt and securities regularly each year based on its yearly debt issuance and redemption schedule.

“For the whole year, the government plans to raise RM135.7 billion worth of gross direct debt while redeeming RM83.3 billion in return. 

“Specifically, RM38.8 billion has been redeemed in the January-August 2019 period and another RM44.5 billion will be redeemed in the September-December 2019 period. 

“Hence, looking merely at the current net direct debt figure without taking into consideration the planned redemption of debt and securities for the remainder of the year would give a grossly inaccurate picture of the country’s debt levels. 

“It deliberately distorts the picture by looking at the monthly picture instead of the entire year, as the annual budget is done on a yearly and not monthly basis,” Lim said.

He added that debt issuance and redemption also fluctuated throughout the year “in order to regularise the cashflow of the government”.

“The issuance of debt will always be proportionally higher in the first half of the year because the revenue collection for the government is always lower in the same period. Correspondingly, the redemption of debt will always be higher in the second half of the year because the government will collect higher revenues during this period.”

Former prime minister Najib Razak is among the Pakatan Harapan government’s regular critics over its borrowings to fund expenditure after slashing the goods and services tax (GST), which the Barisan Nasional government introduced.

Recently, former BN minister Salleh Said Keruak also called for more discussion on Putrajaya’s debt and its move to take new loans.

Lim today said net direct debt figures should be analysed “from the yearly perspective, not monthly, accounting for the full-year issuance and redemption plan”.

“Any attempts to jump to conclusions based on mid-year or incomplete data are clearly intended to mislead and does not reflect the true financial position of the government. 

“This has been the customary financial practice for the government even in the past, and those claiming otherwise despite being part of the previous government is being dishonest,” he said.

He reiterated that revenue collected will be also be used to pay off existing debt and liabilities, including 1Malaysia Development Bhd’s debts. – September 26, 2019.