BUDGET 2019 | A total of RM70 billion in federal government debt is expected to mature in 2019, out of which about 25 percent is to be redeemed in the first half of next year, reflecting a lower refinancing risk in the near term, said the Finance Ministry.

In its 2019 Fiscal Outlook and Federal Government Revenues Estimates report released today, the ministry said under the 2019 Budget, the federal government’s gross borrowing requirements are anticipated to be higher for deficit financing and refinancing of mature papers.

"Despite higher borrowing requirement, the average gross financing need to Gross Domestic Product (GDP) in 2019 is estimated to remain well below the average International Monetary Fund (IMF) threshold of 15 percent for emerging economies," it said.

The ministry further said that the government is also exploring to tap into international markets for portfolio diversification and new benchmarking purpose as well as stimulate financial market trading activities.

Elaborating further on the federal government debt, it said as of end-June 2018, the federal government debt stood at RM725.2 billion or 50.7 percent of GDP, which is below the self-imposed limit of 55 percent of GDP.

The debt comprised 97.1 percent of domestically issued papers denominated in ringgit while the balance of 2.9 percent are offshore borrowings mainly in US dollar.

Consistent with IMF’s definition, the MoF said the country's external debt comprised both public and private sector debt, which include offshore borrowings, non-resident holdings of ringgit-denominated debt securities, non-resident deposits as well as other external debt

As of end-June 2018, the external debt edged up to RM936.5 billion (65.4 percent) of GDP against RM879.8 billion (65 percent) at end-2017.

The ministry said the public sector debt was higher at RM989.2 billion or 73.1 percent of GDP as of end-2017, as compared with RM901.2 billion (73.2 percent) at end-2016, with the federal government debt as the largest component at RM686.8 billion (69.5 percent), followed by non-financial public corporations debt which increased to RM242.8 billion (24.5 percent) from RM204 billion (22.7 percent) recorded at end-2016.

Meanwhile, the debt of statutory bodies increased to RM59.6 billion versus RM48.7 billion at end-2016, mainly attributed to guaranteed issuances by the Public Sector Home Financing Board to fund civil servants housing loans and borrowings by Perbadanan PR1MA to finance housing projects.

– Bernama