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Kuala Lumpur, Malaysia. Image © iStock

1MDB was the centre of one of the world’s most high-profile financial scandals when it was exposed in 2015 that authorities believe officials misappropriated billions from funds that were supposed to drive the country’s economic development.

Finance minister Tengku Zafrul Aziz said the government has recovered 19.1bn ringgit (£3.3bn) so far and paid off 13.3bn ringgit (£2.3bn) of the outstanding debt, which at the end of 2021 stood at 38.8bn (£6.8bn).

“The current balance of the Trust Account [into which recovered money is placed] is sufficient to pay off only the principal amount of the bonds for 2022,” he said.

“Once all the Trust Account funds are utilised, the government will continue to bear the obligation to pay the balance of 1MDB’s debts, whose issuance was backed by government guarantee and letter of support.”

The minister said the government has now received 340.9m ringgit (£59.5m) from accounting company KPMG to settle a lawsuit filed by 1MDB.

He said the government remains committed to recovering more assets related to the scandal to manage the state’s financial burden created by the fund.

The extent of the scandal was revealed in 2015, and in 2020 after a years-long investigation former prime minister Najib Razak, who was chairman of the fund after it was set up in 2009, was convicted on seven counts of abuse of power, money laundering and criminal breach of trust.

In recent years, banks such as Goldman Sachs and AmBank have made settlements with Malaysia to settle claims related to the fund.