KUALA LUMPUR (Nov 6): Total outstanding government guarantees (GGs) as at end-September 2020 climbed to RM289.8 billion or 20.1% of gross domestic product (GDP), from RM275.4 billion or 18.2% of GDP as at end-2019, according to the Ministry of Finance's (MoF) 2021 Fiscal Outlook released today.

The increase was mainly attributed to new issuances by DanaInfra Nasional Bhd and Prasarana Malaysia Bhd to finance public transport infrastructure projects as well as financing raised by the Public Sector Home Financing Board (LPPSA) to fund housing loan facilities for civil servants.

Meanwhile, outstanding committed guarantees (loan guarantees which require financial assistance from the government) were estimated at RM177 billion or 12.3% of GDP as at end-September 2020, mainly to finance existing public transport infrastructure projects.

Most of the GGs were for infrastructure (53.7%) and the services sector (24.3%).

GGs include those for government-linked companies, statutory bodies as well as agencies under state governments.

The top 10 GG recipients, namely DanaInfra, Prasarana, National Higher Education Fund Corp, LPPSA, Malaysia Rail Link Sdn Bhd, Khazanah Nasional Bhd, Projek Lebuhraya Usahasama Bhd, Pengurusan Air SPV Bhd, GovCo Holdings Bhd and Suria Strategic Energy Resources Sdn Bhd, composed more than 80% of total loan guarantees.

As at end-September 2020, the overall portfolio of GGs recorded a weighted average time to maturity of 10.9 years.

According to the MoF, about 20% of GGs are expected to mature within the period of six to 10 years, while about 45% of the portfolio will mature beyond 10 years, thus refinancing risk is manageable.

The report highlighted that the exchange rate risk is relatively minimal as more than 90% of outstanding GGs are mainly denominated in ringgit.

For more stories on the Economic Report 2020/2021, click here.