According to the report, 1MDB must meet massive repayments totalling RM13 billion in 2022 and another RM11.7 billion in 2023, based on lump sum payment of the loan principal upon maturity.
It further estimated that the state-owned firm will have to make annual interest payments of at least RM1.4 billion, based on its current liabilities and prevailing interest rates. This would add nearly RM10 billion on top of the principal amount due by 2023.
“But we have to bear in mind that some of the debt can be refinanced if 1MDB’s credit standing improves,” an unnamed banker told The Star.
1MDB's woes are compounded by the fact that most of its loans are in US dollar, which has appreciated sharply versus the ringgit in recent months. The dollar is currently trading at RM3.60.
Additionally, the firm was forced to use some of its capital earmarked for the development of the Tun Razak Exchange here to meet interest payments.
Independent economist Lee Heng Guie told The Star that Putrajaya must hasten the recovery of 1MDB, saying that its RM42 billion in debt was a “huge” exposure and has consequences on the trust in the Finance Ministry that owns the firm.
“There will be fiscal implications to the government if 1MDB were to need further injections,” he said. Putrajaya has said it does not intend to allow 1MDB to become delinquent.
Moody’s previously told Malay Mail Online that 1MDB’s finances would have a negative effect on Malaysia’s sovereign credit ratings, while Fitch has maintained its negative outlook for the country.
The Star also added in its report that 1MDB's finances does not allow it to meet the payments even though its assets technically exceed its liabilities.
The controversy worsened yesterday after a video of Deputy Prime Minister Tan Sri Muhyiddin Yassin saying the government should sack the entire board of debt-laden 1MDB or face defeat in coming elections surfaced on the Internet.
Prime Minister Datuk Seri Najib has been under pressure over his handling of the 1MDB fiasco, with Tun Dr Mahathir Mohamad openly demanding that he step down for allowing the fund to accumulate some RM42 billion in debt to date from the time it was incorporated in 2009.
In March, Najib ordered the Auditor-General and Public Accounts Committee to investigate 1MDB, amid growing demands for explanations over the state investment firm's allegedly opaque investment decisions and for amassing a RM42 billion debt pile.
Most recently the fund was pilloried after the Finance Ministry ― which Najib also heads ― declared that the US$1.103 billion (RM3.91 billion) that 1MDB redeemed from its offshore account in the Cayman Islands into a Singaporean bank is not in actual cash but assets.
This added to public anger over an expose on RM188.5 million paid to 1MDB by Muslim pilgrim fund Lembaga Tabung Haji for 1.5 acres in the Tun Razak Exchange, and also some RM3 billion invested by the Employees Provident Fund and Retirement Fund Inc in the controversial fund.
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