Dr Mahathir: M’sia is RM1 trillion in debt
He blames it on Najib's government
KUALA LUMPUR Malaysia is saddled with debt of more than RM1 trillion(S$338 billion), Prime Minister Mahathir Mohamad said yesterday, blaming the previous government led by former protege Najib Razak, who now faces domestic graft investigations.
Dr Mahathir, 92, led an opposition coalition to a spectacular win in a general election on May 9, having campaigned aggressively over people's rising living costs and a multi-billion dollar scandal at state fund 1Malaysia Development Berhad (1MDB).
"We find that the country's finances, for example, was abused in a way that now we are facing trouble settling debts that have risen to RM1 trillion," Dr 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 RM300 billion..."
ZERO-RATED
In his first week in charge, Dr Mahathir announced that a broad-based goods and services tax (GST) would be zero-rated from June 1, as his government works to replace it with a reinstated sales and services tax.
Dr 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.
His fiscal measures, however, would widen Malaysia's fiscal deficit and are credit negative without any offsetting measures, according to ratings agency Moody's.
Mr Najib's government had planned to collect RM43.8 billion in GST, about 18 per cent of total revenue.
During the election campaign, Mr Najib had warned that Dr Mahathir's economic proposals would result in debt ballooning to more than RM1 trillion.
Mr 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 per cent of its gross domestic product at June 2017, which was below the government's limit of 55 percent.
Dr 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 Mr Najib to give a statement today in connection with a probe on SRC International, a former unit of 1MDB.
- REUTERS
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