PUTRAJAYA, Aug 2 2012 (Bernama) -- The Federal Government will allocate RM287 million to the State Consolidated Fund in 2014 to finance state governments facing a RM30 million deficit in their operational account, Prime Minister Datuk Seri Najib Tun Razak announced on Thursday.
The cumulative RM257 million would be disbursed to the states based on their economic growth level, infrastructure development and the people's well-being, Najib, who is also Finance Minister, told a media conference after chairing the National Finance Council meeting at the Finance Ministry.
The prime minister said six papers were discussed in today's meeting, covering the Federal Government and State Governments' mutual interests, matters pertaining to state governments' financial management and related issues.
Najib said the National Finance Council also took note of the audit report on the utilisation of the State Road Maintenance Trust Fund and the Road Record Information System (MARRIS) handled by the Finance Ministry in all states.
The report has identified several matters that need to be corrected and improved for the people's comfort and safety, among others, he said.
"Most importantly, this meeting gave strong emphasis to ensure that funds provided by the Federal Government are truly used to the fullest for road maintenance.
"Last year, RM2.591 billion were channelled for road maintenance work as compared to RM1.087.5 billion in 2006, an increase of 138 per cent or on the average the funds were increased by 27.6 per cent a year," he said.
Najib said that it was because some state governments were found to have not fully spend the allocation provided, one special "laboratory" would be established in October to draw up comprehensive guidelines on the procedures and optimum utilisation of the funds to maintain roads in the states.
He said all state governments have agreed to participate in the laboratory.
"This is because the people expect the roads to be well maintained, and the Federal Government can help through this method.
"Nevertheless, the most important thing is to ensure that the funds are used truly for the purpose they are set up for," he said.
Najib said the meeting was also informed that the state governments' loans from the federal government have dwindled by RM1.6 billion or 8.4 per cent from RM19.1 billion in 2010 and RM17.5 billion last year.
He said the state governments' repayment amount has also improved to RM790.6 million last year from RM434.1 million in 2010.
"The bulk of the reduction was due to the taking over of the loans by Pengurusan Aset Air Berhad (PAAB).
"To date, PAAB has taken over loans from five states to implement water supply projects totalling RM3.496.3 billion, he said.
Giving the breakdown, Najib said Penang has borrowed RM655.2 million, Perlis (RM75.1 million), Negeri Sembilan (RM1.128 billion, Melaka (RM764.2 million) and Johor (RM873.7 million).
The prime minister also said today's meeting also heard briefings on the current economic growth status, growth projection for next year and on the global economic outlook.
To a question on whether the country's deficit was also discussed at the meeting, Najib said the matter was deliberated.
"The Federal Government deficit reduction is on track, but the whole figures will be presented in the budget," he said.
Najib will table Budget 2013 in Parliament on Sept 28.
Referring to the laboratory to be established in October, he said the laboratory would also identify the reasons as to why certain state governments did not fully spend the allocations provided in accordance with the stipulated procedures.
The laboratory's decision would be announced to the people, he added.