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KUALA LUMPUR: Finance Minister Tengku Zafrul Aziz said today that the government of Pakatan Harapan had not approved a request from the Penang state government for a foreign loan of RM2 billion.
It was not about the Perikatan Nasional government allegedly withdrawing collateral for the loan, which was to finance a proposed LRT project in Penang.
Former Finance Minister Lim Guan Eng and other DAP politicians have raised a scandal over the alleged withdrawal of a federal government guarantee for the Asian Development Bank (ADB) loan.
Tengku Zafrul told Dewan Rakyat on the background of the loan today while finalizing the debate on budget estimates from the Finance Ministry.
He said the federal government received a letter from the ADB on January 25 last year outlining three financing options for the LRT project.
These were: a direct loan to Penang with guarantees from the federal government; a direct loan to the federal government with repayment to Penang; or a direct loan to a special purpose vehicle with a guarantee from the federal government.
“Further discussions were held between the Ministry of Finance, the Penang State Government and the ADB on July 17, 2019. It was decided that the ADB should carry out due diligence.”
The next day, July 18, the Finance Minister, then Lim Guan Eng, issued a letter to indicate that the federal government had no objection to due diligence being carried out.
Tengku Zafrul said the letter did not bind the federal government by law.
On July 19, the cabinet decided that the Penang state government could not borrow money without the approval of the federal government, Tengku Zafrul said.
“Therefore, the finance ministry did not receive the due diligence report from the ADB. The issue of a guarantee for the ADB loan does not arise since the issue was not approved by the Cabinet, “he added.
Tengku Zafrul rejected an accusation by Lim on Saturday that the federal government was not being sensitive to Penang’s development.
On November 27, news reports said Putrajaya had decided not to continue the government guarantee on Penang’s loan application for the RM9.5 billion LRT project.
Tengku Zafrul was then quoted as saying the decision was in line with the revised revenue and revenue projections for the country, as well as the government’s focus on restoring the economy, following the Covid-19 pandemic.
If the federal government proceeded with the loan, the minister said it would increase the federal government’s commitment to operating and development expenses, as well as other off-budget projects assumed by the government, such as lines 1 and 2 of the MRT (with a cost of 71 billion ringgit). ), LRT3 (RM17.7 billion), the Pan Borneo Sarawak Highway (RM13 billion) and the East Coast Rail Link (RM48.85 billion).
