Saturday, July 6, 2019

Malaysian Government confirms that debt will be kept hidden: Tony Pua's explaining the "fallacies" concerning the toll road loan SPV has the opposite effect

by Ganesh Sahathevan



Tony Pua: Govt need not pay a single sen to acquire toll concessionaires





In the words of Lim Guan Eng's special adviser , Tony Pua, published on the Malaysiakini website, 6 July 2019:


Fallacy 1: Government will be burdened unnecessarily with huge debt

Firstly, they argued that the acquisition will increase the government’s debt burden by RM6.2 billion, which could be better spent for other purposes.

While a designated special purpose vehicle (SPV) would be raising a RM6.2 billion debt to finance the acquisition of the four concessionaires, there needs to be a distinction between debt which the government will ultimately have to bear, versus debt which will be self-financed.

In this case, the RM6.2 billion will be entirely self-financed via the collection of proposed congestion charges. This means that the government would not need to fork out a single sen to pay for the acquisition of these highways. Hence the argument that the proposed acquisition will burden the government with the funds better spent elsewhere is completely untrue.


While a designated special purpose vehicle (SPV) would be raising a RM6.2 billion debt to finance the acquisition of the four concessionaires, there needs to be a distinction between debt which the government will ultimately have to bear, versus debt which will be self-financed.

This writer trusts that the above is self-explanatory. See also previous story below.

END


Saturday, June 29, 2019


Is the Malaysian Government hiding liabilities -Is the toll road SPV one of many?

by Ganesh Sahathevan

This statement by the Minister For Finance Lim Guan Eng is nonsense: 


“The collection of congestion charge (for use of the toll roads) will be sufficient to service the debt, as well as to finance the operation and maintenance costs of the highways without requiring additional budget allocation by MOF.
“In other words, the acquisition cost will be self-financing through the collection of congestion charge and will not require any government expenditure,” Lim said.

The acquisition will be  financed by debt,and via a SPV wholly-owned by the MOF Inc (see story below). Its debts are debts of the Malaysian Government.It is hard to tell if it is the only SPV that is being used by the Malaysian Government to keep liabilities and outflows off the books.
END 





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