It said federal loans were paid in a timely manner based on repayment schedules as stipulated in the agreement between the state and federal governments.

It was responding to a statement by Finance Minister Lim Guan Eng yesterday that the state government should repay its debt to the federal government first instead of demanding its share of the tourism tax revenue.

“Sarawak has no outstanding arrears in loan repayment. This has been reported by the auditor-general in its annual report and presented to the National Finance Council,” the state government said in a statement issued by the Chief Minister’s Office here.

It said that in the case of Sarawak, the federal loans were obtained to finance the implementation of various projects under the Concurrent List which included water supplies, sewerage, industrial estates, housing and agriculture.

“It is a normal procedure as provided for in the Federal Constitution for the states in Malaysia to seek federal funding whether in the form of a grant or loan.

“The funding, be it a grant or loan, would be based on the nature of the project, that is, whether the project would generate revenue in the future,” the statement added.