There is basis for sharp increase in govt debt - Auditor-General

Auditor-General Datuk Seri Nik Azman Nik Abdul Majid said the sharp increase, however, was seen to have a basis as 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 this in a press conference after holding a briefing on the Auditor-General's Report (LKAN) on the Federal Government's Financial Statement 2021 to the Public Accounts Committee in Parliament today.

Also present were PAC chairman Wong Kah Woh and its members.

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 per cent to GDP.

He said that even though the government's financial statement for 2021 was given the Auditor General's Certificate without reprimands, there were matters emphasised by the Auditor General that needed 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," he said.

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

In addition, a sum of RM62.317 billion or 28.7 per cent of the gross borrowings was transferred to the Development Fund, while RM38 billion or 17.5 per cent 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.

Regarding payment on interest, Wong said 16.3 per cent of revenue collection was used for that purpose.

"This means that for every RM1 collected, 16 sen is used for loan interest payments," he said.

In this regard, Wong said the PAC would continue to play a check and balance role against the Executive branch in financial and procurement management so as to ensure that it complies with the stipulated procedures in the Parliamentary Democracy with Constitutional Monarchy system in this country.