Future generations may be saddled with 1MDB debts, warns Jomo

Jomo Kwame Sundaram.

KUALA LUMPUR: Former Council of Eminent Persons (CEP) member Jomo Kwame Sundaram has warned that future generations will have to bear the burden of 1MDB’s debt if the government fails to pay it off.

He said the burden could be in the form of higher taxes, unless the government finds other ways to pay off the RM50 billion debts.

The prominent economist said the 1MDB debt was not “explicitly government-guaranteed”.

“It is government-guaranteed debt only in the sense that the signing authorities are associated with the government,” he said.

Government-guaranteed debt doesn’t go through Parliament and as such there is no accountability, Jomo explains.

“This becomes a very serious problem in that the authorities are able to take on debt, without being accountable to the public, to Parliament, or any other authority for that matter,” he said.

As such, this created a situation where “we are all accountable” for the debts.

He was speaking at the launch of a book by Universiti Malaya economist Nazari Ismail, “Till Debt Do Us Part: The Growth of the Global Banking Industry and its Insidious Effects”.

Meanwhile, Jomo said 1MDB is not the only cause of financial burden for the government.

“1MDB is only the biggest, most recent one.”

He gave as an example the size of the civil service that has almost doubled in the last 10 years, from 840,000 to 1.7 million.

“That’s a huge number of people you have to pay salaries to,” said Jomo.