KUALA LUMPUR: Former Malaysian prime minister Najib Razak has continued to accuse his successor Mahathir Mohamad of "unnecessarily spooking" the country's stock market, causing investors and government-linked investment companies to suffer losses, by declaring that the national debt is RM1 trillion.
Finance Minister Lim Guan Eng had on Thursday explained how the RM1 trillion figure was derived. He said that while the official federal government debt is RM686.8 billion, the government is committed to pay RM199.1 billion in government guarantees on behalf of several entities that are unable to service their debt.
The government also must make lease payments for several public-private partnership projects, which amount to RM201.4 billion, Lim said in a statement.
Najib seized on the statement to further his claims that Mahathir had inflated the size of Malaysia's debt.
In a Facebook post on Friday (May 25), Najib said: "I am glad that the finance minister has come clean in his statement yesterday that the official federal government debt remains at 686.8 billion ringgit (US$172.5 billion) (50.8 per cent of the gross domestic product, or GDP) - not 65 per cent or 1 trillion ringgit as previously claimed."
"The level of 50.8 per cent is much lower than the 103.4 per cent reached during the first reign of Tun Mahathir (Prime Minister Mahathir Mohamad)," he added.
Mahathir had blamed the ballooning debt on abuses by the previous government led by Najib.
In response, Najib on Friday said that the previous government had "always complied with international debt reporting guidelines", and questioned the inclusion of government guarantee figures.
"Contingent obligations, such as guarantees, have never been included in the official measurement of government debt, not even during Tun Mahathir's previous reign," he said.
"The government had given these guarantees to certain entities it owns to help lower their financing cost. These are typically long-term obligations backed with revenue-generating assets."
As for public-private partnership projects or private finance initiative leases, Najib said these were "operating expenses and not debt", and were "much needed social infrastructure".
"THE SPADE HAD ALWAYS BEEN CALLED A SPADE"
In his post on Friday, Najib reiterated his previous claim that the new administration's remarks on Malaysia's debt and 1MDB liabilities had caused the stock market to fall.
"Now that the truth is revealed about this 'RM1 trillion national debt', we congratulate the new government for unnecessarily spooking the market which has led to sharp falls of our stock exchange this week - capping 14 consecutive days of foreign capital outflows," he said.
"This debacle has led to real losses to stock market investors and our GLICs (government-linked investment companies) such as EPF, KWAP, Khazanah and Tabung Haji," he said.
"I hope and pray that PH (Pakatan Harapan) government ministers will be more careful in making assertions in future."
Lim had also said that the new federal government "had decided to call a spade a spade", adding that it was necessary to solve problems in the present.
In response, Najib said: "We did not hide 300 billion ringgit of debts or falsified figures as alleged. The spade had always been called a spade as per universally accepted guidelines."