KL to spend $17b paying 1MDB debts

Finance chief says final figure still pending as probe goes on and documents come to light

1MDB is one of several state-linked firms that are unable to pay government-backed loans totalling RM199 billion. PHOTO: REUTERS

Malaysia will pay a total of RM50 billion (S$17 billion) to cover the liabilities of 1Malaysia Development Bhd (1MDB) that now fall on taxpayers after the scandal-ridden state fund fell into insolvency two years ago.

Finance Minister Lim Guan Eng said yesterday that on top of RM7 billion spent since April last year, there is still RM38 billion in government-guaranteed debt that will only be settled in 2039 and interest payable on these borrowings.

"We are looking at a ballpark figure of at least RM50 billion," he said. "I've asked our experts to see how we can extricate ourselves from the debt payments.

"Unfortunately, I have been advised that these are ironclad government guarantees," he added.

Mr Lim said a final figure was still pending, with documents being discovered and the probe ongoing.

He said there were documents relating to 1MDB in the Finance Ministry that were previously sealed based on "instructions from the top" under the Barisan Nasional administration which was ousted on May 9.

"It's like a jigsaw puzzle, all the pieces are coming together," he said, but stopped short of saying if there was evidence pointing to former premier Najib Razak, who was also finance minister.

Datuk Seri Najib has repeatedly denied claims of graft involving 1MDB since US$700 million (S$940 million) linked to the troubled firm was found in the then Prime Minister's personal accounts .

1MDB is one of several state-linked firms that are unable to pay government-backed loans totalling RM199 billion.

This was revealed by the Finance Ministry last week when it detailed how the government's liabilities had ballooned to RM1.1 trillion, or 80 per cent of the economy.

Mr Lim also revealed how the China-backed East Coast Rail Link (ECRL) "is in a different situation" compared to the High-Speed Rail to Singapore which the government plans to scrap.

"RM20 billion has already been paid out. So even if you cancel the project, how does it help the country? Of course, why that money has been paid out, that answer can only be given by the previous government and previous prime minister."

The ECRL, which stretches from the Klang Valley to Kota Baru city in north-east Kelantan state, is being financed by a RM55 billion loan from China's Exim Bank, which is being drawn down and paid directly to contractor China Communications Construction Co.

Mr Lim said an announcement on China-linked deals "will be made after negotiations with the Chinese government" which will be "under the wing" of Prime Minister Mahathir Mohamad.

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A version of this article appeared in the print edition of The Straits Times on June 02, 2018, with the headline KL to spend $17b paying 1MDB debts. Subscribe