1MDB, SRC debts: With RM44.54b outstanding, here’s how much Putrajaya will have to pay in installments next year

KUALA LUMPUR, Nov 26 — Putrajaya has to repay RM3.272 billion in 2021 in loan installments and interest on debts, out of a combined outstanding amount of RM44.5 billion of government-guaranteed debts owed by 1Malaysia Development Berhad (1MDB) and its former subsidiary SRC International Sdn Bhd.

In a written parliamentary reply yesterday, the Finance Ministry said both 1MDB and SRC International faced a critical financial situation due to past scandals and misappropriation of funds, and that these two companies were no longer actively operating and are unable to fulfill the obligations of repaying debts that were either directly or indirectly guaranteed by the Malaysian government.

In such a situation, the ministry said the government would be paying off the next batch of installments owed by 1MDB and SRC International next year.

“For 1MDB, the total balance of 1MDB’s debt (principal and interest) on October 31, 2020 is RM40.87 billion, while the amount of 1MDB debt that has to be paid in 2021 is RM1.705 billion which involves interest/coupon payments for three bonds and one sukuk issued by 1MDB and its subsidiaries.

“This total is based on the assumption that the foreign exchange rate is at RM4.20 for each US$1.00. The repayment of 1MDB’s debts in 2021 will be made by using the 1MDB asset recovery funds and government financial allocation,” the ministry said in its reply.

As for SRC International, the ministry said the civil service’s pension fund Retirement Fund Incorporated (Kwap) has agreed to restructure the RM4 billion loan it had previously given to SRC International, effective from the year 2020 to March 28, 2022.

“The total balance of borrowings after the restructuring is RM3.67 billion which covers the loan’s principal and interest. For 2021, the amount of scheduled payment to Kwap is RM1.567 billion which covers the principal payment of RM1.5 billion and interest payment of RM67.1 million that will be paid through government financial allocations,” it added when referring to SRC International’s debts.

Taking 1MDB’s RM1.705 billion interest payment and SRC’s RM1.5671 billion scheduled repayment, the total that the Malaysian government has to ensure is paid in 2021 is RM3.2721 billion or RM3,272,100,000.

The ministry was responding to Pokok Sena MP Datuk Mahfuz Omar from Parti Amanah Negara who asked the amount of 1MDB and SRC International debts that have to be paid by the government next year, as well as the source of funds that would be used for such debt payments.

GLCs responsible for own debts, govt to foot 1MDB’s debts

Separately, the Finance Ministry also responded to Teluk Intan MP Nga Kor Ming, who wanted to know in detail the amount of government debt, including for government-linked companies (GLCs), as at October; and measures for repayment.

In a written parliamentary reply, the Finance Ministry said GLCs are responsible for their own debts.

“Regarding the debts of GLCs, all GLCs are responsible for the fulfillment of their financial obligations. Whereas for 1MDB, this obligation will be borne by the federal government.

“The government is continuing efforts to recover 1MDB assets. As of September 30, 2020 the balance of the 1MDB asset recovery trust account is RM11.7 billion and all of it will be used to repay 1MDB’s financial commitments,” the ministry said.

As of September, the total government debt exposure and liabilities is estimated to be RM1,257 billion; that’s about 87.3 per cent of the country’s gross domestic product.

The ministry said this amount covers various commitments such as RM177 billion worth of guarantees on GLCs’ debts for infrastructure projects and public utilities, 1MDB’s debts of almost RM32 billion and an estimated RM173.3 billion for public-private partnership projects and off-budget projects previously implemented.

The ministry said the government is currently focusing on helping the economy recover from the Covid-19 pandemic. This includes supporting businesses and ensuring Malaysians’ welfare.

It said the government will return to consolidating its fiscal position once the economy recovers so that its debt exposure and liabilities will be at a controlled and managed level.

The ministry added that the government’s future fiscal plans will see it expand its revenue base, strengthen governance and tax compliance and increase spending efficiency to control Malaysia’s fiscal deficit levels.