Government to issue additional RM2 billion treasury bills

KUALA LUMPUR: The Government is expected to issue an additional RM2 billion treasury bills for the purpose of liquidity management.

In its Fiscal Outlook and Federal Government Revenues Estimates 2019 Report, the Finance Ministry revealed that government’s gross borrowings were expected to reach RM112.9 billion, or 79 per cent of gross domestic product ( GDP), this year. Total deficit financing accounts for RM53.3 billion while debt financing amounts to RM61.2 billion.

“Domestic borrowings remain as the main source, constituting 99.9 per cent of the total gross borrowings while external drawdowns remain minimal at 0.1 per cent,” it said.

The country’s deep and well developed bond market has provided ample liquidity in the domestic financial market, enabling the government to raise borrowing requirements in local currency. This reduces Malaysia’s direct exposure to foreign exchange and interest rate risks.

In terms of domestic borrowings, Malaysian Government Investment Issue (MGII) issuance is expected to be higher at RM63.8 billion this year ( 56.5 per cent of total gross borrowings) compared with 2017’s RM53.5 billion (46.9 per cent).

The increasing trend in the issuance of shariah- compliant papers indicates continuous commitments to promote Islamic instruments while providing an avenue for investors’ portfolio and risk diversification.

Meanwhile, Malaysian Government Securities issuances are expected to constitute 43.4 per cent of total gross borrowings or RM49 billion this year. — Bernama