‘Reduction in fiscal risk will raise investor confidence’

could be referring to replacing the more expensive foreign currency debts, such as the dollardenominated 1Malaysia Development Bhd’s bonds, with cheaper loans or debt securities issued in another currencies, such as the Yen, as he had mentioned during his visit to Japan.

Likewise, he said, if the loans in Renminbi were found to be steeper, they could be substituted by domestic or another foreign currency debts, thereby reducing the country’s overall debt-servicing burden.

Yeah suggested that Dr Mahathir could be mulling these actions to address corruption that could have taken place in some mega deals.

“Renegotiating the terms and uncovering illegal payoffs, if any, will contribute to a reduction in the size of the debt.

“By lowering the debt-servicing burden, it will strengthen the country’s fiscal position.

Reducing exposure to a particular currency would also help to diversify currency risks, especially if the foreign currency had a strong likelihood of appreciation, making the loans more expensive to service in the future, he said.

“A reduction in fiscal risk and an improvement in debt management will raise investor confidence, thereby shielding the currency from undue depreciation pressures.

“Lower debt servicing also means that the government can allocate more resources to spending, that in turn will boost the country’s growth, thereby lending support to the currency value,” he said.

In the Channel NewsAsia interview, Dr Mahathir, in responding to a question, said there was no need to peg the ringgit as the government was looking at the two options (going cashless and changing the currency notes).