Malaysia's government bond supply may slow in the second half and is on track to fall by the end of 2024 amid a smaller deficit and strong investor demand.
Issue for July-December may come in the range of RM83.5 billion to RM85.5 billion. Malaysian government securities and government investment issues recorded a total of RM94.5 billion in the first half of 2024.
According to RAM Rating's Head of Economic Research, the production speed so far this year has generally met expectations. Markets should not expect the government bond supply to veer too far from its current trajectory.
This year, the government aims to narrow its budget gap as a share of economic output to 4.3% from 5% last year. The government issued RM186 billion MGS and GII in 2023.
Malaysia has been trying to reduce the long-term fiscal deficit that stretches back to the 1998 Asian Financial Crisis.
The government has introduced various measures from subsidy cuts to additional taxes in an effort to improve its weak finances.
However, the key withdrawal of subsidies for fuel and non-essential goods is now widely scrutinized by economists for leakages and waste.
Under Budget 2024, the allocation for development expenditure will decrease to RM90 billion from RM97 billion for 2023.
However, high operating expenses in emoluments, retirement charges and debt service payments are increasing. It is expected to take two-thirds of the federal government's revenue. - The Edge Malaysia
