PUTRAJAYA - Finance Minister Lim Guan Eng said on Thursday (May 24) that RM3.2 billion (S$1.1 billion) of public assets were bought by Malaysia's central bank and sovereign wealth fund so it could pay 1MDB's debts last year.

He said the Najib Razak administration redeemed shares in wealth fund Khazanah Nasional worth RM1.2 billion, equivalent to a payment made on Aug 11, 2017, on behalf of the state investor previously controlled by the ousted former premier.

Mr Lim added that on Dec 14, 2017, Bank Negara bought a piece of land from the Ministry of Finance (MOF) worth RM2 billion. This made up the bulk of a RM2.4 billion payment on behalf of 1MDB.

"1MDB was already insolvent in 2016. If you look at payments made by the federal government, it is clear that it was a bailout," he said.

However, he did not provide details of how it was determined that the money received by MOF was directly used to pay off 1MDB's obligations.

"I have outlined in detail the schedule of debt payments made by the federal government on behalf of 1MDB," he said, referring to a press conference he gave on Tuesday, when he revealed that MOF has paid RM7 billion on behalf of 1MDB since April 2017.

He said that the government would have to continue paying 1MDB's debt including a commitment due on May 30, as it has guaranteed the borrowings.

Asked if the government would hold Khazanah and Bank Negara management responsible, Mr Lim said that they had come under "all sorts of pressures" by the previous administration.

"Everyone should be accountable. Of course, if they are instructed in writing to take certain actions, then they have some justification," he said.

Mr Lim also dismissed 1MDB chief Arul Kanda's threat to sue him over accusations that the latter was dishonest and untrustworthy.

"Arul Kanda has made many promises. If he wants to sue, we will be waiting for him, but I do not know whether he will do that. He must bear in mind he is the only employee of 1MDB and it is solely owned by the Ministry of Finance," he said.

Mr Lim also broke down the claimed RM1 trillion debt, which has been disputed by Datuk Seri Najib.

Mr Najib, in a Facebook comment on Wednesday, said the new government's claim that total debts stood at RM1 trillion, without giving details, would unsettle financial markets, alarm credit rating agencies and affect investors' confidence in Malaysia's institutions such as Bank Negara Malaysia.

He wrote: "As a result of these alarming and confusing statements, our Bursa Malaysia index fell the most among all worldwide stock markets resulting in tens of billions of ringgit in market value wiped out in one day. Our Bursa index fell 40.78 points today or 2.21 per cent while the Indonesian stock index added 0.71 per cent."

Giving the breakdown, Mr Lim said the official debt stands at RM686.8 billion, or 50.8 per cent of gross domestic product. Added to this would be government guarantees for entities that are unable to service their debts amounting to RM199.1 billion (14.6 per cent of GDP), including RM38 billion for 1MDB.

This brings the total of federal government debt to RM885.9 billion or 65.4 per cent of the economy.

However, Mr Lim also pointed out that another RM201.4 billion (14.9 per cent of GDP) was committed to "lease payments" for "public-private partnership" projects such as the building of schools, roads, police stations and hospitals.

"(They) were designed specifically to circumvent the Federal Government guarantee and debt limits," he said.

This brings the total government liabilities to RM1.0873 trillion, or 80.3 per cent of the economy as of end-2017.