KUCHING: The Sarawak government has clarified that it has no arrears in the repayment of its outstanding loans with the federal government.

It said the federal loans owed by the state as at Dec 31, 2018, amounted to RM2.38bil, which were paid based on repayment schedules stipulated in the agreement between the state and federal governments.

"Every year, the Sarawak state government provides sufficient allocation in its annual budget for repayment of the loans.

"In fact, Sarawak is one of the states which has no arrears in loan repayment.

"This has been reported by the Auditor-General in its annual report and presented to the Treasury," the state government said in a statement on Monday (Jan 7).

It was responding to Finance Minister Lim Guan Eng's statement on Sunday (Jan 6) that Sarawak owed RM2.5bil to the federal government, with RM50mil in arrears.

The Sarawak government also said it was normal procedure, as provided for in the Federal Constitution, for the states in Malaysia to seek federal funding in the form of grants or loans.

In Sarawak's case, it said the federal loans were obtained to finance the implementation of various projects under the Concurrent List of the Federal Constitution.

These include water supply, sewerage, industrial estates, housing and agriculture, mainly oil palm plantations involving smallholders.