THE Debt Management Committee (DMC) has endorsed the federal government’s 2020 borrowing programme, which includes the option of issuing an additional tranche of the samurai bond.

Finance Minister Lim Guan Eng said in a statement today the decision was made during a DMC meeting on Monday, in which the committee also discussed action plans to manage the government’s debt and liabilities.

“The committee also highlighted the importance of containing government guarantees (GG) and public-private partnership (PPP) obligations to avoid unnecessary intergenerational transfers of debt burden, where our children will be paying our debts,” he said.

He said the committee evaluated existing and additional GG facilities, as well as the best practices in assessing and monitoring contingent liabilities using the latest financial technology.

Lim said the government was committed to consolidating its overall debt and liabilities, adding that in the medium term, the government aimed to lower its debt and liabilities to 65% of GDP by end-2025 from 77.1% as of end-June 2019.

“Debt and liabilities (as at end-June 2019) comprised government’s direct debt (52.6%), committed government guarantees (10.4%), 1MDB debt (2.1%) and other liabilities, namely PPP, Pembinaan BLT Sdn Bhd and private finance initiatives (12%),” he said.

On Malaysia’s total external debt, which stood at RM931.1 billion as of end-June 2019, Lim said only RM190 billion of the external debt belonged to the government through its direct debt.

“External debt is different from the government’s direct debt as it comprises individual, corporate and government debt held by foreigners, as well as offshore borrowings and non-resident deposits,” he said.

Lim said direct debt in the first quarter of 2018 stood at RM705 billion, which rose to RM799.1 billion in the second quarter of 2019.

“The RM94.1 billion increase in direct debt financed development expenditure, fiscal deficit and debt repayments, including 1MDB,” he added. – Bernama, December 6, 2019.