Putrajaya’s rising debt is scary, says Wong Chen

PETALING JAYA: How much more can the government borrow before it hits the wall?

That was the question Kelana Jaya MP Wong Chen raised when FMT asked for his comments on the latest auditor-general’s report.

He noted that the report showed Putrajaya had been spending more money than it had been collecting.

Wong, who heads PKR’s commerce and investment bureau, said the gradual increase in Malaysia’s debt over the last five years showed that the government had poor fiscal discipline. This had in fact been true for the last 18 years, he added.

The auditor-general’s report revealed that the federal government’s debts had now grown to RM648.475 billion from RM501.617 billion in 2012.

In the last two years, it said, there was an increase of RM18 billion in total debt, up 2.8% from RM630.54 billion in 2015.

It attributed the debt growth to an increase of RM15.759 billion in domestic debt and RM2.176 billion in foreign debt last year.

In 2015, spending stood at RM24.283 billion. This increased to RM26.48 billion in 2016.

The report said the government had borrowed close to RM100 billion for development expenditure and to settle debts previously incurred.

Wong said the scariest thing was that most of these debts were funded by the Employees Provident Fund (EPF) savings as a result of the pension fund’s purchase of government bonds as a debt instrument.

According to a report in The Edge in April last year, EPF invested RM167 billion in federal government securities, representing 23.8% of its total investments.

Wong said the government would be putting EPF money to risk if it continued to rule with no fiscal discipline, unabated corruption and the continuance of wastage.

These debts need to be repaid and the interest alone costs us an incredible RM27 billion a year, he said.

Source: Malaysian Trades Union Congress