KUALA LUMPUR: The unprecedented additional borrowings incurred during the pandemic resulted in the increase of federal government debt level and still impacting the public finance, according to Fiscal Outlook 2024.
Therefore, due to the elevated debt-to-gross domestic product (GDP) ratio and the financing requirement under the 12th Malaysia Plan (12MP), the government maintained the statutory debt limit at 65 per cent of GDP, the report said.
As at end-August 2023, the government's statutory debt, which comprises Malaysian Government Securities (MGS), Malaysian Government Investment Issues (MGII) and Malaysian Timber Industry Board (MITB), recorded 59.9 per cent of GDP below the stipulated debt ceiling.
Meanwhile, the statutory debt limit for offshore borrowings and Malaysia Treasury Bill (MTB) remained at RM35 billion and RM10 billion, respectively.
In this regard, offshore borrowings as at end-August 2023 amounted to RM30 billion while MTB stood at RM3.5 billion, of which these instruments' outstanding are still within the stipulated thresholds.
As at end-August 2023, the report stated that the total government debt stood at RM1.15 trillion or 62 per cent of GDP, largely denominated in ringgit with a share of 97.4 per cent of the total debt, while the remaining 2.6 per cent was in foreign currencies.
Out of the total debt, Shariah-compliant instruments constituted RM569.2 billion or 49.6 per cent, signifying government continuous support for development of the Islamic capital market.
"The large composition of these instruments at 96.5 per cent were denominated in ringgit while the remaining were in US dollar," it said.
On domestic debt, the report said it is diversified across various maturities and types of instruments.
Short-term domestic debt with less than 12-month maturities are MTB amounted to RM3.5 billion and MITB at RM31 billion, while medium-and long-term domestic debt with maturities ranging from 3- to 30-year comprise MGS amounted to RM564.3 billion and MGII at RM512.8 billion.
Another component is Sukuk Perumahan Kerajaan (SPK) which registered RM5.5 billion and will be fully redeemed in 2024.
Meanwhile, Malaysia's exposure to foreign exchange risk is minimal due to a small share of offshore borrowings which registered RM30 billion.
The offshore borrowings consist of market loans totalling RM26.3 billion which denominated in US dollar (75.8 per cent) and yen (24.2 p-er cent), while project loans amounted to RM3.7 billion were primarily in yen (97.6 per cent) and the balance were in other currencies.
Resident holdings of the federal government debt as at end-June 2023 amounted to RM863.4 bilion, representing 75.4 per cent of the total debt.
The non-resident holdings registered RM281.6 billion or 24.6 per cent of the total debt.