Malaysia's total debt, liabilities rose to RM1.17t as at end-June

• Total debt, liabilities expanded to 77% of GDP, versus 75.4% of GDP as at end-2018
• Federal government debt grew RM58.1 billion in the half-year period
• Committed guarantees increased RM24.6 billion
• RM8.9 billion extended to 1MDB for debt servicing as at end-June

Malaysia’s total debt and liabilities rose to RM1.17 trillion or 77.1% of gross development product (GDP) as at end-June 2019, from RM1.09 trillion or 75.4% of GDP at end-2018, according to the Ministry of Finance's 2020 Fiscal Outlook and Federal Government Revenue Estimates, released today.

The 7.3% increase in total debt and liabilities during the half year period was due to an increase in government government debt and committed guarantees, which stood at RM799.1 billion and RM157.3 billion as at end-June, or 52.6% and 10.4% of GDP, respectively.

In contrast, federal government debt as at end-2018 stood at RM741 billion (51.2% of GDP), while committed guarantees added up to RM132.7 billion (9.2% of GDP).

“Apart from the federal government debt, other obligations exposure of the government are committed guarantees, 1Malaysia Development Bhd’s (1MDB) debt and other liabilities which include estimated cash commitments of public private partnerships (PPP) and private financing initiative (PFI) projects,” the report stated.

As at end-June, 1MDB debts totalled RM32.2 billion, or 2.1% of GDP, while other liabilities amounted to RM181.7 billion or 12% of GDP.

Some RM920 mil recovered from 1MDB assets as at June

Malaysia has received about RM920 million from recovered assets related to 1Malaysia Development Bhd (1MDB) as at end-June 2019, which will be used to serve the insolvent fund’s debt obligations, according to the Ministry of Finance.

As at end-June, the government has extended an advance of RM8.9 billion to 1MDB for debt servicing, the MoF's Economic Report 2019/20 shows.

The ministry said the government is in pursuit of recovering other assets related to 1MDB, but maintained that the recovery process is expected to take some time due to legal requirements and negotiations.

This is as most of the assets are currently located abroad, such as in Singapore, Switzerland and the US.

Based on the Parliament’s Public Accounts Committee report, the Pakatan Harapan-led government has had to assume 1MDB’s entire obligations, including debt principal of RM32.19 billion, due to mismanagement and poor governance.

Click here for more property stories.