KUALA LUMPUR: Dr Mahathir Mohamad today questioned Moody’s negative rating for the government’s plan to spend some RM6 billion to bail out the Federal Land Development Authority (Felda), saying the international rating agency had not given a similar downgrade when the country was saddled with debt.
“When Malaysia owed RM1 trillion, there was no talk of this downgrading. This is strange because actually we have saved the government a lot of money by solving all these problems of ECRL, Felda, Tabung Haji and now Bandar Malaysia,” the prime minister told reporters today.
He said while rating agencies had their own criteria, the previous government owed huge amounts of money resulting in annual deficits.
“But they retained the ratings. Now when we are trying to solve these problems, we are told it is the wrong move,” said Mahathir.
Putrajaya recently announced RM6.23 billion in financial aid to help Felda cope with losses and debts accumulated over the past decade, following a white paper detailing its financial health.
The agency’s total liabilities multiplied over 10 years, from RM1.2 billion in 2007 to RM14.4 billion in 2017, according to a white paper released in Parliament citing poor management and issues related to integrity.
Following the announcement, Moody’s warned that it would add to the government’s debt burden.
“We estimate that the assistance will raise the government’s debt burden by 0.3% of GDP to 56% in 2019, substantially higher than a median debt ratio for A-rated sovereigns of 37.8%, and up from 50.7% in 2017,” it said in a note.
Mahathir said his government had worked out ways to settle Felda’s debts, adding that settlers were shortchanged after their lands were leased to FGV Holdings Berhad.
“The government has been helping the settlers because they have incurred a lot of loans for replanting (oil palm), and during replanting there was no income,” he added.
He said Felda had given financial assistance to settlers with conditions to pay back.
“It is a loan, not a gift,” he said, adding that some settlers decided not to repay and instead sold their fruits, causing a loss to the government.
He said the government now plans to integrate settlers’ farms into big estates.