Stop being in denial on impact of dwindling ringgit: Guan Eng slams Tok Pa

KUALA LUMPUR – In light of the volatile currency index, economy minister Datuk Seri Mustapa Mohamed must disclose the extra payment to be borne by the government due to foreign exchange losses from its US-denominated debt, said DAP chairman Lim Guan Eng.

“Minister in the Prime Minister’s Department Mustapa Mohamed is doing a great disservice to the nation by refusing to acknowledge the high cost that will be paid with the feeble excuse in Parliament, that only 5% of Malaysia’s debt is denominated in the US dollar.

“While the depreciation of the ringgit is due in part to aggressive US interest rate hikes, Mustapa should not ignore the fact that the ringgit has also depreciated by more than 4% this year against the Indonesian rupiah and dropped to a historic low of RM 3.26 to the Singapore dollar.”

In a statement today, Lim reiterated that the government should also stop being “in denial” about the weak ringgit having a high impact on Malaysia’s debt.

“The 1MDB (1Malaysia Development Bhd) US$6.5 billion bonds alone that were arranged by Goldman Sachs may cost an additional RM8.5 billion at the current 24-year low of RM4.65 to the US dollar. 

“Is the government paying an additional RM8.5 billion more from foreign exchange losses just for one 1MDB US$6.5 billion bond – which is not of high impact – without taking into account other currency losses from US denominated debt?”

Mustapa had told the Dewan Rakyat that the ringgit’s depreciation only had a small impact on the federal government’s debt payment as its direct debt is largely denominated in ringgit, with less than 5% in US dollar.

He added that much of the government’s debt is in ringgit, particularly Treasury Bills and government securities.

“Perhaps some private institutions have external debts but in Bank Negara Malaysia’s view, the liquidity of local banks is healthy and the international reserves amount to about US$106 billion which can cover the short-term external debt,” Mustapa said in the Dewan Rakyat question-and-answer session yesterday.

He added that the Budget 2023 would detail measures to address next year’s lower global economic growth. – The Vibes, October 4, 2022