KUALA LUMPUR - Malaysia on Wednesday said it will consider a combination of newdebt issuance and asset sales to meet its short-term financing needs after a scrapped consumption tax was expected to leave a revenue shortfall.

The Mahathir Mohamad-led government removed the unpopular goods and services tax just weeks after a stunning victory in a May general election, and replaced it with a new tax structure that would only bring in half as much revenue as the previous one.

High debt levels are also a concern for the government, which has blamed the previous administration of Najib Razak for bringing the country's liabilities to around 1 trillion ringgit ($241.43 billion). The debt includes that of state fund 1MDB, which is the subject of money laundering investigations in several countries.

In a statement on Wednesday, Finance Minister Lim Guan Eng said any additional debt issuancewill be gradual and made known to the market through the auction calendar, in line with current practise.

"This will ensure that investors would be able to absorb the additional issuances without major adjustments in yields that could increase the borrowing cost of the government," he said.

The government would also consider selling some of its shares and land, and lease its idle assets and buildings, Lim said.

Malaysia plans to avoid over reliance on any one type of financing.

"The priority is towards finding the lowest financing cost," Lim said, adding that timing will be guided by the ability of the financial markets to absorb the fund raising in an orderly manner.

($1 = 4.1420 ringgit)

(Reporting by Rozanna Latiff and A. Ananthalakshmi; Editing by Kim Coghill and Sam Holmes)

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