Worrying, says auditor-general on govt paying matured debt with new loans

The position of the government in depending on new loans to finance the repayment of loan principals which have matured has been described as worrying.

Auditor-General Nik Azman Nik Abdul Majid said even though the certificate of the auditor-general for year 2020 was issued with a clean certificate status without any reprimand, several matters should be given emphasis including the status of federal debts.

“Half of the new loans were used to pay loans which have matured when they should be paid with surplus revenue.

“Nonetheless, in 2020, the country was facing the Covid-19 threat and the government was forced to take measures to assist the health system and the people to combat Covid-19,” he said at a media conference at Parliament building today.

The Auditor-General’s Report on the Federal Government Financial Statement as well as 2020 Federal Ministries and Departments Compliance Audit tabled at the Dewan Rakyat today found that RM98.058 billion or 50.4% of RM194.555 billion in new loans of the government was for the repayment of the principal of loans in 2020.

The amount rose by RM15.335 billion compared to the total of RM82.723 billion in 2019.

Nik Azman said the department proposed prudent spending and ensuring that all development expenditures are financed with loans that should be serviced according to schedule within reasonable costs without leakage or wastage.

Another issue that was given attention was the Development Fund for 2020 which was not fully used for the purpose of development.

“We found RM2.6 billion used to fund maintenance expenditure which is usually funded by operating expenditure.

“The funds for development are mostly from borrowings which should be used to generate revenue in the future. Even though it is allowed under the act in Development Fund, from the economic aspect, we feel it is not so appropriate. We hope the government will look into the matter,” he added.