Posted on 08 Jul 2015
The government is creating a statutory body to take over the housing loans it currently manages for civil servants, he said, that will move about RM40 billion into off-balance-sheet liabilities and reduce the government's debt-to-gross domestic product ratio.
The government is also trying to rein in its contingent liabilities by imposing a fee on government-guaranteed debt, Mohd Irwan said.
He also reiterated the government's stance to gradually remove subsidies from petrol, liquefied petroleum gas and cooking oil in the coming years.
A Fitch Ratings decision to pull back from downgrading Malaysia is giving the country space to reinforce its fiscal credentials, he said.
"This would help us to further strengthen and continue our effort despite all these noises, which I consider temporary," Mohd Irwan said, referring to the Fitch decision. "We are very committed in our fiscal consolidation."
Mohd Irwan also reiterated the government's assertion that 1Malaysia
Development Bhd is sound and has enough assets to pay off its debt.
"We cannot afford to be in subsidy mode forever," Mohd Irwan said.
"We are at a point where there are too many subsidies and the government budgetary system can't afford to carry such a burden."
The goods and services tax (GST) of 6% has, to Mohd Irwan, helped counter a decline in government revenue following the plunge in crude oil prices.
Collections from the GST so far have exceeded the government's estimate, he said, without giving details.
Malaysia is incurring additional contingent liabilities beyond explicit guarantees, Fitch said June 30, even as it maintained the country's credit rating at the fourth-lowest investment grade of A- and upgraded the outlook to "stable" from "negative".
The Fitch decision came after the government outlined its plans for fiscal consolidation and sustaining the current- account surplus, assuring the company Malaysia will avoid a twin deficit situation, Mohd Irwan said.
