Putrajaya risks nothing by guaranteeing Penang loan, says Guan Eng

Penang has done very well for itself since 2008, says former chief minister Lim Guan Eng. – The Malaysian Insight file pic, December 1, 2020.

PUTRAJAYA risks nothing by standing guarantee for Penang’s RM2 billion loan for an LRT project, former finance minister Lim Guan Eng said.

“There is no risk to the federal government since the loan will be fully paid by the Penang government.

“(Penang has) strong financial standing,” Lim added, citing the state’s robust financial performance since 2008, which is acknowledged in the yearly Auditor-General’s Report and backed by numbers.

He said Penang increased its asset reserves by nearly RM1.2 billion to RM2 billion in 2018, while chalking up the least debt among the states of only RM58 million compared to some BN states which owed the federal government more than RM3 billion each at end-2018. Lim, who was the Penang chief minister, said the state’s sound financial position had enabled it to secure a RM1.5 billion loan rom CIMB for Penang Development Corporation.

“Penang has never defaulted on paying these loans,” he said. Lim was responding to Finance Minister Tengku Zafrul Tengku Abdul Aziz’s clarification yesterday that there was no question of Putrajaya “withdrawing” the federal government’s guarantee for a loan as it had never given the guarantee in the first place.

Lim said he took that to mean that the Penang government’s loan application was not cancelled and that Zafrul would consider the application for a guarantee when it was presented to him. Lim noted that the lender Asian Development Bank required a sovereign guarantee for a loan.

“I would agree there are other cheaper loans available, but this would be dependant on the willingness of the federal government to provide prior approvals. No financial institution would even consider evaluating a loan unless the green light is given first by the federal government,” he said, urging Putrajaya to consider Penang’s strong financial standing. – December 1, 2020.