KUALA LUMPUR, Nov 6 (Bernama) — The Federal Government's total gross borrowings are expected to increase by 31.5 per cent from the original estimate to record RM181.5 billion or 12.6 per cent Gross Domestic Product (GDP) amid the need to finance the COVID-19 stimulus measures.

Against the backdrop of this uncertain economic environment in 2021, gross borrowing requirements are expected to remain substantially at around 11 per cent of GDP, said the Finance Ministry (MoF).

Of the total gross borrowing for 2020, RM94.7 billion will be utilised for principal repayments while RM86.5 billion for deficit financing, the ministry said in the Fiscal Outlook and Federal Government Revenue Estimates 2021 report released today.

MoF said domestic borrowings will remain as the primary source of funding, estimated at RM181.5 billion or 99.9 per cent of total gross borrowings, while the balance of RM30 million will be drawn down from offshore project loans.

It said almost the entire financing operations, including to finance stimulus packages, are raised via domestic sources to minimise foreign exchange risk exposure. 

In 2020, the issuance of Malaysian Government Securities (MGS) is expected to register RM73 billion or 40.2 per cent of total gross borrowings, and Malaysian Government Investment Issue (MGII) RM76.5 billion or 42.1 per cent.

Additionally, Treasury bills of RM32 billion, which was raised for cash and liquidity management, had doubled compared with the average issuance over the past five years, it said.

As a result of the increased borrowing needs to support growth, overall Federal Government debt is projected to increase to about 61 per cent of GDP, with the statutory debt to remain around 58 per cent in 2021.