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Abuses pushed Malaysia's debt to over 1 trillion ringgit: Mahathir
MALAYSIA is saddled with over 1 trillion ringgit (S$340 billion) in debt, Prime Minister Mahathir Mohamad said on Monday, blaming the previous government led by former protégé Najib Razak who now faces domestic graft investigations.
Dr Mahathir, 92, led an opposition coalition to a spectacular win over Mr Najib's previously undefeated ruling alliance in a general election on May 9, having campaigned aggressively over people's rising living costs and a multi-billion-dollar scandal at state fund 1Malaysia Development Berhad (1MDB).
"We find that the country's finances, for example, was abused in a way that now we are facing trouble settling debts that have risen to a trillion ringgit," Dr Mahathir said when speaking for the first time to staff of the prime minister's office.
"We have never had to deal with this before. Before, we never faced debts higher than 300 billion ringgit, but now it has climbed to 1 trillion ringgit."
He also urged his staff to give him their undivided cooperation in the administration of the country.
"As long as I don't violate any laws, I hope all of you will give your undivided cooperation to me as the Prime Minister," he said.
"We must restore the country to ensure that it will be looked highly upon and respected once again."
In his first week in charge, Dr Mahathir announced that a broad-based goods and services tax (GST) would be zero-rated from June 1, as his government works to replace it with a reinstated sales and services tax (SST).
He had also promised to reintroduce fuel subsidies besides doing away with GST, all part of his coalition's pledge to tamp down rising living costs.
But Dr Mahathir's fiscal measures would widen Malaysia's fiscal deficit and are credit-negative without any offsetting measures, according to ratings agency Moody's.
Mr Najib's government had planned to collect 43.8 billion ringgit in 2018 in GST, about 18 per cent of total revenue.
During the election campaign, he had warned that Dr Mahathir's economic proposals would result in debt ballooning to over 1 trillion ringgit.
Mr Najib also rebutted opposition claims that federal debt had risen to alarming levels under his governance, and said that debt amounted to about 50.9 per cent of its GDP at June 2017, which was below the government's limit of 55 per cent.
Dr Mahathir said last week that many of the figures recording the country's financial position may be false.
Malaysia's anti-graft agency has summoned Mr Najib to give a statement on Tuesday in connection with a probe on SRC International, a former unit of 1MDB.
The summons came days after police raided six premises linked to the former prime minister as part of investigations into the state investment fund that he founded in 2009.
Among the items seized were 284 boxes of designer handbags and dozens of bags filled with cash and jewellery, from a luxury condominium in the centre of Kuala Lumpur linked to Mr Najib. REUTERS