DAP chairman Lim Guan Eng has urged the government to adopt structural economic reforms immediately to arrest the ringgit’s rapid descent, warning “there will be adverse repercussions” particularly on government debt held in US dollars.

As the ringgit dropped to a 24-year low of RM4.54 against the US dollar yesterday, the former finance minister said, at the current exchange rate, the government now owes an extra RM7.7 billion on the principal sum due to the three tranches of bonds that Goldman Sachs had arranged for 1Malaysia Development Bhd (1MDB), or RM29.5 billion in total.

The bonds, he said, issued in 2012 – US$1.75 billion at 5.75% per year and US$1.75 billion at 5.99% per year – and in 2013 – US$3 billion at 4.4% per year – are due this year and next year “when the strength of the US dollar is at its highest in 24 years”.

“At RM3.35 to the US dollar when the 1MDB dollar bonds were issued, the principal sum in three tranches of US$6.5 billion would come up to about RM21.8 billion.

“At the current exchange rate, the principal sum due is RM29.5 billion, or an extra RM7.7 billion,” the Bagan MP said.

He wanted to know why Umno leaders and Prime Minister Ismail Sabri Yaakob were not making any noise about the currency’s continued slide in value.

Lim also said the cumulative interest would be more than RM1 billion a year.

“A weaker ringgit this year means that the annual interest cost is around RM1.5 billion instead of RM1 billion.”

The ringgit has also recently dipped to a historic low of RM3.26 against the Singapore dollar, while the Indonesian rupiah has similarly appreciated by more than 4% this year. – September 17, 2022.