KUALA LUMPUR, Oct 4 — Malaysia could fork out an extra RM8.5 billion for the 1MDB principal debt with the ringgit continuing to devalue against the US dollar, DAP chairman Lim Guan Eng cautioned today.
He sounded a similar alarm last month when the ringgit was RM4.54 to the greenback on September 16, urging the government to treat the issue more seriously as he projected the principal debt would cost RM7.7 billion more then.
“Assessing the cost alone of the 1MDB US US$6.5 billion bonds arranged by Goldman Sachs in 2012 and 2013, the government will have to pay an extra RM8.5 billion to repay the principal,” he said in a statement in response to Minister in the Prime Minister’s Department Datuk Seri Mustapa Mohamed’s remarks in Parliament yesterday.
Lim reminded the government that the ringgit was RM3.35 to the US dollar when US$6.5 billion of 1MDB bonds were issued, which would be about RM21.78 billion today.
The former finance minister said that at the current exchange rate of RM4.65 to the US dollar, the principal due for the US$6.5 billion would now be higher at RM30.23 billion — or an extra RM8.5 billion.
“Cumulative interest would have totalled just over RM1 billion a year and RM10.5 billion in the past decade.
“A weaker ringgit this year means that the annual interest cost is around RM1.5 billion instead of RM1 billion,” the Bagan MP added.
Yesterday, Mustapa said the weaker ringgit has little impact on the government’s debt payment as its direct debt is largely denominated in ringgit, with less than 5 per cent in the US dollar.
He said much of the government’s debt, particularly treasury bills and government securities, is in ringgit, so the impact is minimal.
“Perhaps some private institutions have external debts, but in Bank Negara Malaysia’s (BNM) 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,” he replied during Question Time in the Dewan Rakyat.