MoF refutes claims net direct debt exceeds budget

PETALING JAYA: Finance Minister Lim Guan Eng (pix) has refuted claims that the RM58 billion net direct debt raised to date has already exceeded the budgeted RM52 billion for the full year.

In a statement released yesterday, he said the RM58 billion figure fails to take into consideration two key factors.

“First and most importantly, the government issues and redeems its debt and securities regularly each year based on its yearly debt issuance and redemption schedule. For the whole year, the government plans to raise RM135.7 billion worth of gross direct debt while redeeming RM83.3 billion in return.”

“Specifically, RM38.8 billion has been redeemed in the January-August 2019 period and another RM44.5 billion will be redeemed in the September-December 2019 period.”

He said looking merely at the current net direct debt figure without taking into consideration the planned redemption of debt and securities for the remainder of the year would give a grossly inaccurate picture of the country’s debt levels.

Secondly, he said issuance and redemption of debt necessarily fluctuates throughout the year in order to regularise the cashflow of the government.

“The issuance of debt will always be proportionally higher in the first half of the year because the revenue collection for the government is always lower in the same period. Correspondingly, the redemption of debt will always be higher in the second half of the year because the government will collect higher revenues during this period.”

Lim stressed that the net direct debt figures should be analysed from the yearly perspective, not monthly, accounting for the full-year issuance and redemption plan.

He said the government is on track to meet its deficit target of 3.4% of gross domestic product (GDP) and will raise RM52 billion net direct debt for development expenditure purposes this year.

The funds raised are entirely allocated for the purposes of development expenditure such as roads and infrastructure for the public.

source https://www.thesundaily.my/business/mof-refutes-claims-net-direct-debt-exceeds-budget-GD1410091