Kuala Lumpur – Malaysian Prime Minister Mahathir Mohamad on Monday, blamed
previous government led by former protege Najib Razak for the one trillion ringgit (251.70 billion dollars)
in debt.
Mahathir, 92, led an opposition coalition to a spectacular win over 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,” 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 one trillion ringgit,” Mahathir said.
In his first week in charge, 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.
Mahathir 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.
Mahathir’s fiscal measures, however, would widen Malaysia’s fiscal deficit and are credit negative without
any offsetting measures, according to ratings agency Moody’s.
Najib’s government had planned to collect 43.8 billion ringgit (11.05 billion dollars) in 2018 in GST, about
18 per cent of total revenue.
During the election campaign, Najib had warned that Mahathir’s economic proposals would result in debt ballooning
to over one trillion ringgit.
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.
Mahathir said on Friday that many of the figures recording the country’s financial position may be false.
Malaysia’s anti-graft agency has summoned 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 Najib founded in 2009.
Among the items seized include 284 boxes of designer handbags and dozens of bags filled with cash and jewelery,
from a luxury condominium in the center of Kuala Lumpur linked to Najib.