Malaysia’s lower house passes motion to transfer RM14.5 billion in MGII proceeds to the Development Fund for fiscal deficit financing
KUALA LUMPUR: The Dewan Rakyat has today approved a motion to transfer the remaining RM14.5 billion in proceeds from Malaysian Government Investment Issues (MGII) issued between January and May 2026 to the Development Fund.
A majority voice vote passed the motion after a debate by Datuk Seri Ismail Abd Muttalib (PN–Maran) and Datuk Zulkafperi Hanapi.
Deputy Finance Minister Liew Chin Tong said the Development Fund is financed through transfers from the Consolidated Revenue Account, the Consolidated Loan Account, loan repayments, and various development-related receipts.
“In general, transfers from the Consolidated Loan Account to the Development Fund comprise proceeds from the issuance of Malaysian Government Securities (MGS), MGII, Treasury Bills, and external borrowings,” he said in the Dewan Rakyat when presenting the technical resolution to transfer the remaining RM14.5 billion in MGII proceeds today.
Liew said the total MGII issuance is estimated at RM95 billion in response to Ismail’s question on its breakdown.
Of this amount, RM55 billion was allocated to refinance maturing MGII, RM2 billion to partially finance the redemption of Malaysian Islamic Treasury Bills (MITB), which are short-term shariah-compliant securities issued by the Malaysian Government, while the remaining RM38 billion will be used to partially finance the 2026 fiscal deficit.
“Between January and May 2026, the gross issuance of MGII was RM40 billion. After taking into account RM25.5 billion to refinance maturing MGII, the net proceeds proposed to be transferred from the Consolidated Loan Account to the Development Trust Account are RM14.5 billion,” he explained.
The government is only permitted to borrow to finance development expenditure (DE); the operating expenditure (OE) may only be financed through government revenue and tax collections, Liew said under the existing legal framework.
He also said there is a proposal to transfer the remaining June to December 2026 MGII issuances during the next parliamentary sitting.
Responding to Zulkafperi’s question on the potential “crowding out” effect in the domestic financial market — where local financial institutions such as the Employees Provident Fund (EPF) and the Retirement Fund Incorporated (KWAP) purchase these government debt securities — Liew said the government has been reducing the amount of new borrowings year by year over the past several years.
He added that the issuance of government securities and MGII provides investment opportunities for the EPF and other financial institutions to continue investing in Malaysia and earn returns. Without such domestic investment opportunities, the country’s currency could be adversely affected.
The Dewan Rakyat will resume sitting tomorrow.
