Lim chairs new DMO to resolve problem of hidden govt debts and liabilities

by ALIFAH ZAINUDDIN/Pic by ISMAIL CHE RUS

THE government has established a Debt Management Office (DMO) to review the government’s debt and liabilities, to be chaired by Finance Minister Lim Guan Eng.

The office will oversee the issuance and propose the structure of debt belonging to the federal government, all statutory bodies and the government’s special-purpose vehicles in a holistic manner.

Lim said the Pakatan Harapan administration intends to cut the incidences of having expensive and irresponsible debt servicing payments arising from weaknesses in debt issuance coordination.

The establishment of the DMO is an effort by the administration to overcome and resolve the problem of hidden government debts and liabilities, which grew in excess of RM1 trillion in 2017.

The plan to set up the DMO was announced during the 2019 budget speech in November last year.

The office is among the institutional reforms carried out to strengthen the government’s fiscal position that is closely monitored by international credit rating agencies.

The task of the DMO will be to schedule bond issuance and overall borrowings by the government, statutory bodies and government- owned companies in an orderly fashion and to attain the cheapest interest rates and coupon payments.

It will also restructure the relevant bonds and borrowings where possible to save finance costs by reducing debt repayments.

“The DMO is designed to keep government debts and liabilities in check by preventing it from growing out of control, while ensuring that reckless borrowings made without valid reasons will no longer occur,” Lim said in a statement yesterday.

The DMO will come into effect immediately in order to craft the necessary strategies to reduce the country’s financial burden and put the plan into action.

The formulated strategies and plans will be presented to the Fiscal Policy Committee chaired by Prime Minister (PM) Tun Dr Mahathir Mohamad.

Members of the DMO include Chief Secretary to the Government Datuk Seri Dr Ismail Bakar, Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus, Securities Commission Malaysia executive chairman Datuk Syed Zaid Albar and Permodalan Nasional Bhd group chairman Tan Sri Dr
Zeti Akhtar Aziz.

Others include Treasury secretary general Datuk Ahmad Badri Mohd Zahir, Economic Affairs Ministry secretary general Datuk Saiful Anuar Lebai Hussen, accountant general of Malaysia Datuk Saat Esa, Pricewaterhouse- Coopers Malaysia executive chairman Datuk Mohammad Faiz Azmi and economic advisor to the PM Dr Muhammed Abdul Khalid.