Malaysia is saddled with over 1 trillion ringgit ($251.70 billion) in debt, Prime Minister Mahathir Mohamad said yesterday, blaming the previous government led by former protege Najib Razak who now faces domestic graft investigations.

Mahathir, 92, led an opposition coalition to a spectacular win over Najib's previously undefeated ruling alliance in a general election on May 9, having campaigned aggressively over people's rising living costs and a multi-billion dollar scandal at state fund 1Malaysia Development Berhad (1MDB).

"We find that the country's finances for example, was abused in a way that now we are facing trouble settling debts that have risen to a trillion ringgit," Mahathir said when speaking for the first time to staff of the prime minister's office.

"We have never had to deal with this before. Before we never faced debts higher than 300 billion ringgit, but now it has climbed to 1 trillion ringgit," Mahathir said.

In his first week in charge, Mahathir announced that a broad-based goods and services tax (GST) would be zero-rated from June 1, as his government works to replace it with a reinstated sales and services tax (SST).

Mahathir had also promised to reintroduce fuel subsidies besides doing away with GST, all part of his coalition's pledge to tamp down rising living costs, reported Reuters.

Malaysia's anti-graft agency has summoned Najib to give a statement today in connection with a probe on SRC International, a former unit of 1MDB.

Mahathir's office also announced the establishment of a new task force made up of members of the anti-graft agency, police and the central bank, which would liaise with "enforcement agencies in the United States, Switzerland, Singapore, Canada and other related countries," investigating 1MDB.

The US Department of Justice refers to Najib as "Malaysian Official Number 1" in its anti-kleptocracy investigation into 1MDB.

The fund, 1Malaysia Development Berhad, was set up in 2009 ostensibly to promote the development of the Malaysian economy.

But it is alleged that Najib, his family and cronies looted the investment vehicle in a massive fraud stretching from the Cayman Islands to New York, with stolen funds used to buy everything from real estate to artworks, reported AFP.

Since Najib's ouster, Malaysians have been gripped by a series of police raids on properties linked to the ex-leader, which have yielded a stash of hundreds of luxury handbags believed to belong to his despised wife Rosmah Mansor, as well as suitcases stuffed with cash and jewels.

Mahathir -- who first served as premier from 1981-2003 and came out of retirement to take on Najib -- had pledged to reopen probes into 1MDB.

The new task force will be charged with seizing back assets and pursuing legal action against those suspected of breaking the law in relation to the fund, said the prime minister's office.

"The government hopes the setting up of this task force, comprising a multi-agency enforcement unit, will help restore the dignity of Malaysia that has been tainted by the 1MDB kleptocracy scandal," said Mahathir's office.