Samurai bond: Govt considers forex rate, finance cost before finalising

Samurai bond: Govt considers forex rate, finance cost before finalising

KUALA LUMPUR: The government will always take into account the foreign exchange (forex) rate as well as the financing cost before finalising the second Samurai bond issuance, said Deputy Finance Minister Datuk Amiruddin Hamzah.

This was to ensure the financial cost was competitive and would not burden the government, he said.

“The federal government’s financing requirements are obtained through the issuance of government bonds and sukuk from local and foreign sources, in line with the financial procedures set according to the terms in the Loan (Local) Act 1959, Funding Act 1983 and External Loans Act 1963.

“The loans are only raised to finance development expenditures and refinancing loans that have matured,” he said, in reply to a question from Ahmad Amzad Mohamed (PAS-Kuala Terengganu) in relation to the purpose of issuing the second Samurai bond at the Dewan Rakyat today.

Amiruddin said the development expenditures covered projects and programmes including schools, hospitals, roads, and providing access to utilities.

Recently, Prime Minister Tun Dr Mahathir Mohamad announced the offer made by Japan for Malaysia to issue the second Samurai bond at a lower interest rate of 0.5% compared with 0.63% previously.

Meanwhile, Amiruddin said the government’s debt commitment would be made based on plans formulated much earlier, besides simultaneously redeeming the old debt.

He said this in reply to a supplementary question from Hasan Abdul Karim (PH-Pasir Gudang) regarding the authenticity of the government bond statistics issued by Putrajaya in 2019 as reported by a financial daily last month.

Amiruddin said from January to August 2019, the debt issuance amounted to RM102.2 billion, while debt redemption during the same period totalled RM38.8 billion, giving a net issuance of RM63.4 billion.

“If only the total debt of RM102.2 billion is taken, and say that we owe more than what we announced in Parliament, this is only to confuse the public,” he said.

Elaborating further, he said for the September to December 2019 period, the government will issue bonds worth RM33.5 billion, while redeeming debt totalling RM44.5 billion.

“This makes total net issuance (debt) that is redeemed more than the amount we issue…Hence, what we have done (debt issuance) is in accordance with a careful plan.

“So, we do not commit debt more than what we have stated and what has been agreed in Parliament,” he added.


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Datuk Amiruddin HamzahDewan rakyatSamurai bonds