Economic Report 2016/17: Higher federal govt debt on development expenditure financing

PETALING JAYA: The federal government debt stood at RM655.7 billion as at end-June 2016 or 53.2% of gross domestic product (GDP), mainly due to higher domestic debt issuance to finance development expenditure, said the Economic Report 2016/17.
This compares with RM630.54 billion in 2015.
Domestic debt continued to account for the largest share of total debt at 95.9%, while the remaining is from offshore borrowings.
Meanwhile, Malaysia's external debt stood at RM848.2 billion as at end-June 2016, representing 68.8% of GDP.
The federal government maintains its funding mainly from domestic sources, which is expected to constitute 93.2% of total gross borrowings. This helps to lessen the impact of adverse exchange rate movements on debt valuation and debt servicing.
For 2016, total federal government gross borrowings are estimated at RM92.8 billion mainly for principal repayment amounting to RM53.3 billion, while the balance is for deficit financing.
Gross domestic borrowings for 2016 are expected to be RM86.5 billion. Malaysian government securities (MGS) remain as the major source of domestic funding, amounting to RM44 billion or 50.9% while the balance is Malaysian government investment issues (MGII).
The bulk of the debt comprised deposits and ringgit-denominated debt securities held by non-residents at RM309.6 billion or 25.1% of GDP, followed by private sector debt at RM166.7 billion or 13.5% of GDP.