The government has been borrowing billions of ringgit through bond issues.
There are two main types of government bonds: Malaysian Government Securities (MGS) and Government Investment Issues (GII).
Plans were announced for 19 bond issues this year – 12 via MGS and seven via GII. Each issue raises about RM2-4 billion.
For 2010, RM23.3 billion has been allocated to repay part of the Federal Government’s gross borrowings and to finance the 5.6 per cent (of GDP) fiscal deficit.
Last year, 2009, the government raised RM88.5 billion from 19 MGS issues and nine GII issues with an average interest rate of 3.5 per cent. Demand for the bonds was said to be twice the value of the bond issues. Each issue raised RM2.5-4.5 billion. (The above information was contained in a reply to an oral question raised by Anwar Ibrahim in Parliament on 24 March 2010.)
Bank Negara reports that Malaysia’s central government debt (total current liabilities) stood at RM378 billion at the end of the first quarter of 2010, up from RM362 billion in the previous quarter.
Central government debt is different from public sector debt. (Public sector debt includes municipal and local councils and the pension system.) Central government debt is mostly debt incurred in raising money to tackle budget deficits. Most of this debt is raised in capital markets. It is thus marketable and subject to investors’ sentiment.
Meanwhile, our gross external debt (total public and private debt owed to non-residents) stands at RM246 billion in the first quarter of 2010. This includes long-term loans and bonds outstanding in ‘other sectors’ (apart from government, monetary authorities and banks) totalling RM121 billion.