pic by TMR FILE

THE government has issued bonds worth RM102.2 billion in the first eight months of the year, said Deputy Finance Minister Datuk Amiruddin Hamzah (picture).

Within the same period, the government redeemed RM38.8 billion worth of debt, resulting in total net issuance of RM63.4 billion.

“For 2019, our total net issuance is budgeted at RM52.4 billion,” Amiruddin told the Dewan Rakyat yesterday.

He was responding to Ahmad Amzad Mohamed (PAS-Kuala Terengganu) who asked on the reason to issue the second Samurai bond.

“Rest assured that bond issuance throughout the year has been carefully planned and that the Finance Ministry is also redeeming bonds at the same time.

“We have to accept when we are facing a budget deficit, which is from the development expenditure, not the operating expenditure,” he added.

He said the issuance of the bonds is in line with financial regulations set out in the Loan (Local) Act 1959, the Government Funding Act 1983 and the External Loans Act 1963, which stipulate that government loans can only be made to finance development expenses and refinance mature debts.

The External Loans Act 1963 has also set a limit for external borrowings at RM35 billion, he added.

Amiruddin said the government is planning to raise RM33.5 billion in bonds for the month of September to December 2019, while redeeming RM44.5 billion debts during the same period.

Putrajaya is now considering a second yen-denominated debt sale following the success of the first ¥200 billion (RM7.34 billion) Samurai bond which, with a coupon rate of 0.63% per annum, was oversubscribed by over 1.6 times at ¥324.7 billion.

The sale marked the country’s successful return to the Japanese bond market after 30 years.

In a statement issued in September this year, Finance Minister Lim Guan Eng said the Japan Bank for International Cooperation has agreed to guarantee the second Samurai bond issuance and reduce the interest rate to 0.5% with a 10-year maturity term.

Lim also noted that Prime Minister (PM) Tun Dr Mahathir Mohamad has received Japanese PM Shinzo Abe’s approval for the bond issuance.

Dr Mahathir had previously confirmed that Malaysia is considering the issuance of a second bond from Japan as the country sought cheap funding alternatives to plug the government’s financial gaps.

He said the bond would allow Malaysia to capitalise on the exchang-rate variance between the Japanese currency and the US dollar.

Japan, the world’s third-largest economy, is known for its ultra-low rates. In January, the Bank of Japan pledged to keep its 10-year government bond yields at 0% as central banks loosened monetary policies in the face of a global economic slowdown.