KUALA LUMPUR: The government has set up a Debt Management Office (DMO) to overcome and resolve the problem of hidden government debt and liabilities which grew more than RM1 trillion in 2017.
Finance Minister Lim Guan Eng said on Wednesday the DMO would oversee the issuance and propose the structure of debt belonging to the Federal Government, all statutory bodies and the Government’s special purpose vehicles (SPV) in a holistic manner.
“The Pakatan Harapan administration intends to cut the incidence of having expensive and irresponsible debt servicing payments arising from weaknesses in debt issuance coordination,” he said in a statement.
The DMO is among the institutional reforms carried out to strengthen the government’s fiscal position that is closely monitored by international credit rating agencies, he said.
Lim said the DMO was designed to keep government debt and liabilities in check by preventing it from growing out of control, while ensuring that reckless borrowing made without valid reasons will no longer occur.
He added Prime Minister Tun Dr Mahathir Mohamad had agreed to the setting up of the DMO.
The DMO will perform the following duties:
* Schedule bond issuance and overall borrowings by the Government, statutory bodies and government-owned companies in an orderly fashion to attain the cheapest interest rates and coupon payments;
• Restructure the relevant bonds and borrowings where possible to save finance costs by reducing debt repayments;
• Formulate strategies to reduce the Government’s debt and liability burden.
Lim as Finance Minister will chair the DMO. The members are:
• Chief Secretary to the Government, Datuk Seri Dr Ismail Bin Hj Bakar;
• Treasury Secretary-General, Datuk Ahmad Badri Bin Mohd Zahir;
• Secretary-General to the Ministry of Economic Affairs, Dato’ Saiful Anuar Bin Lebai Hussen;
• Bank Negara Malaysia Governor, Datuk Nor Shamsiah Mohd Yunus;
• Securities Commission Executive Chairman, Datuk Syed Zaid Albar;
• Permodalan Nasional Berhad Group Chairman, Tan Sri Dr Zeti Akhtar Aziz;
• Accountant-General of Malaysia, Datuk Saat Bin Esa;
• PricewaterhouseCoopers (PwC) Malaysia Executive Chairman, Datuk Mohammad Faiz Azmi; and
• Economic Advisor to the Prime Minister of Malaysia, Dr Muhammad Abdul Khalid.
“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 the Prime Minister,” he said.