Malaysia: Guan Eng leads 10-member office to oversee govt’s debt, liabilities

  • A Debt Management Office (DMO) has been set up to review and manage the government’s debt and liabilities, which will be chaired by Finance Minister Lim Guan Eng.
  • Apart from Guan Eng, the nine other members include Chief Secretary to the Government Datuk Seri Dr Ismail Bakar, Treasury secretary-general Datuk Ahmad Badri Mohd Zahir, Economic Affairs Ministry secretary-general Datuk Saiful Anuar Lebai Hussen, Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus and Securities Commission Malaysia executive chairman Datuk Syed Zaid Albar.
  • The rest are Permodalan Nasional Bhd group chairman Tan Sri Dr Zeti Akhtar Aziz, Accountant-General of Malaysia Datuk Saat Esa, PricewaterhouseCoopers Malaysia executive chairman Datuk Mohammad Faiz Azmi and Economic Adviser to the Prime Minister Dr Muhammad Abdul Khalid.
  • The office is tasked to oversee the issuance and propose the structure of debt belonging to the federal government, all statutory bodies and the government’s special purpose vehicles in a holistic manner.
  • According to the ministry’s Fiscal Outlook and Federal Government Revenue Estimates 2019, the federal government’s overall debt and liabilities stood at MYR1.07tr or 74.5% as a percentage of national gross domestic product (GDP) as at 30 Jun 18 — slightly lower from MYR1.09tr or 80.3% of GDP at 31 Dec 17.
  • Of that, MYR725.2bn was the national debt (50.7% GDP), while MYR184.9bn come from other liabilities (12.9% GDP), MYR117.5bn from committed government guarantees (8.2% GDP), and MYR38.3bn was the net debt of 1Malaysia Development Bhd (2.7% GDP).
  • Guan Eng said the government intends to cut the incidence of having expensive and irresponsible debt servicing payments arising from weaknesses in debt issuance coordination.
  • The office will perform the following duties:
  • Schedule bond issuance and overall borrowings by the government, statutory bodies and government-owned companies in an orderly fashion to attain the cheapest interest rates and coupon payments;
  • Restructure the relevant bonds and borrowings where possible to save finance costs by reducing debt repayments; and
  • Formulate strategies to reduce the government’s debt and liability burden.

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