KUALA LUMPUR (May 15): A Debt Management Office (DMO) has been set up to review and manage the government’s debt and liabilities, which will be chaired by Finance Minister Lim Guan Eng.

Apart from Lim, the other nine members include chief secretary to the government Datuk Seri Dr Ismail Bakar, Treasury secretary-general Datuk Ahmad Badri Mohd Zahir, Economic Affairs Ministry secretary-general Datuk Saiful Anuar Lebai Hussen, Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus and the Securities Commission Malaysia executive chairman Datuk Syed Zaid Albar.

The rest are Permodalan Nasional Bhd group chairman Tan Sri Dr Zeti Akhtar Aziz, Accountant-General of Malaysia Datuk Saat Bin Esa, PricewaterhouseCoopers Malaysia executive chairman Datuk Mohammad Faiz Azmi and Economic Advisor to the Prime Minister 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," Lim said in a statement today.

He added that the establishment of the office has been agreed to by Prime Minister Tun Dr Mahathir Mohamad. 

The plan to set up the DMO was announced during the 2019 budget speech in November last year.

The office is tasked to oversee the issuance and propose the structure of debt belonging to the federal government, all statutory bodies and the government’s special purpose vehicles in a holistic manner.

Lim said the government intends to cut the incidence of having expensive and irresponsible debt servicing payments arising from weaknesses in debt issuance coordination.

"The establishment of the DMO is an effort by the administration to overcome and resolve the problem of hidden government debt and liabilities, which have grown in excess of RM1 trillion in 2017," he said.

"The office is among the institutional reforms carried out to strengthen the government’s fiscal position that is closely monitored by international credit rating agencies.

"The DMO is 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.

The office 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.