Outstanding govt guarantees rise 1.9% to RM300 billion

Outstanding govt guarantees rise 1.9% to RM300 billion
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KUALA LUMPUR (Oct 29): The total outstanding government guarantees (GGs) increased 1.9% to RM300.4 billion as at end-June 2021, from RM294.7 billion as at end-2020, amid new issuances by the Public Sector Home Financing Board and DanaInfra Nasional Bhd.

The government said more than half of GGs issued are for infrastructure-related financing, followed by services (26.6%), investment holding (8.3%), utilities (6.8%) and others (4.1%), with the 10 main GGs constituting more than 80% of the total guarantees.

“The weighted average time to maturity of the GGs stood at 10.9 years as at end-June 2021, while in terms of maturity profile, 52.8% is expected to mature within 10 years, whereas 47.2% is expected to mature beyond 10 years.

“Currency risk is largely reduced as more than 90% of the GGs is denominated in ringgit while the remaining is a mixture of other currencies such as renminbi, yen and the US dollar,” the government said in its 2022 Fiscal Outlook report.

Committed guarantees — GGs provided to entities that require government assistance in debt servicing, working capital assistance or cash flow support — saw a slight increase to RM190.4 billion as at end-June from RM185.7 billion as at end-2020, mainly due to issuances by DanaInfra and Malaysia Rail Link Sdn Bhd for existing transport infrastructure projects.

However, the government said there is an increased risk from GG recipients, particularly those in the services sector, amid the various movement restrictions enforced to contain the spread of Covid-19.

“In this regard, the government will continuously monitor the impact of the Covid-19 crisis on all GG recipients in assessing the risks of the entities requiring assistance from the government.

“Concurrently, the financial performance of the companies under committed guarantees is closely monitored while ensuring implementation of a recovery plan to reduce the risk exposure to the government,” it said.

Besides DanaInfra and Malaysia Rail Link, other entities with committed guarantees include Prasarana Malaysia Bhd, Urusharta Jamaah Sdn Bhd, Suria Strategic Energy Resources Sdn Bhd, GovCo Holdings Bhd, Jambatan Kedua Sdn Bhd, Turus Pesawat Sdn Bhd, MKD Kencana Sdn Bhd, SRC International Sdn Bhd, Sentuhan Budiman Sdn Bhd, TRX City Sdn Bhd and Assets Global Network Sdn Bhd.

For more stories on the Economic Report 2021/2022, click here.

S Kanagaraju