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Friday, January 27, 2023

Auditor-General report reveals that government’s debt has increased by RM100 billion in 2021

Social NewsAuditor-General report reveals that government's debt has increased by RM100 billion in...

The Federal Government debt has increased by RM100 billion from RM879.56 billion to RM979.81 billion in 2021, says Auditor-General Datuk Seri Nik Azman Nik Abdul Majid.

He said that this is understandable as the sharp increase is part of the borrowings was used to finance activities to deal with Covid-19 and revive the economy.

“We understand that. The only thing we are worried about is that this high debt increase cannot continue; this should only be a short-term measure. In our opinion, the Government needs to make this a temporary measure and take corrective action so that this matter will be more manageable,” he said.

He said this during the briefing on the Auditor-General’s Report (LKAN) on the Federal Government’s Financial Statement 2021 to the Public Accounts Committee in Parliament. Also present were PAC Chairman Wong Kah Woh and its members.

Things to take note

Wong said the increase in debt also caused the total liabilities of the Federal Government in 2021 to amount to RM1.298 trillion or 84% to GDP.

He said that although the Government’s financial statement for 2021 was given the Auditor General’s Certificate without reprimands, the PAC would like to highlight the several areas to be given attention.

Among the matters emphasised are the repayment of matured loans using new borrowings, the reduction of the percentage of development expenditure, the increase of federal debt and different recognition from the revenue recognition principle in modified cash basis accounting.

Source: Malay Mail

Spending more, not investing more

He said that the gross borrowings last year amounted to RM217.201 billion, an increase of 11.6% compared to RM194.55 billion in 2020, of which 52.4% or RM113.764 billion was utilised for principal repayments.

In addition, a sum of RM62.317 billion or 28.7% of the gross borrowings was transferred to the Development Fund, while RM38 billion or 17.5% was transferred to the Covid-19 Fund.

“Of the RM62.317 billion transferred to the Development Fund, RM40.994 billion was used for development expenditure, compared to RM37.53 billion in 2020.”

“A total of RM12.612 billion was utilised for financing Private Finance Initiatives Liabilities and commitments on guarantees, while RM8.711 billion of development expenditure was a reclassification from operating expenditures,” he said.

On the interest payment, Wong pointed out that 16.3% of revenue collection was used for that purpose.

“This means that for every RM1 collected, 16 sen is used for loan interest payments,” he explained.

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