KUALA LUMPUR: Malaysia has no plans to withdraw from the bond market.
Commenting on a research conducted by multinational investment bank and financial services company Morgan Stanley on Malaysia’s position in the FTSE World Government Bond Index (WGBI), Prime Minister Tun Dr Mahathir Mohamad said that Malaysia would remain in the bond market.
“That is something concluded by rating agencies and not by the government.
“We have no intention to withdraw from the bond market,” he said at a press conference here today.
Morgan Stanley, in a research note, said Malaysia could see outflows of almost US$8b billion if its bonds were downgraded by global index provider FTSE Russel.
On Monday, FTSE said it would review Malaysia's market accessibility level in the WGBI due to concerns about market liquidity.
Malaysia, currently is assigned a '2' and has been included in the WGBI since 2004
FTSE said Malaysia was being considered for a potential downgrade to '1', making it ineligible for inclusion in the WGBI.
Dr Mahathir said he was baffled by rating agencies move to downgrade Malaysia over its move to rescue and resolve problems involving beleaguered government-linked companies.
“This is strange ... when it was announced that Malaysia owed RM1.3 trillion (in debts), there was no talk about downgrading.
“I suppose rating agencies have their own set of criteria.
“However, it is a fact that the previous government owed huge sums of money that would cause deficit in the budgets for many years to come,” Dr Mahathir said.
The Pakatan Harapan administration, said Dr Mahathir, had helped the nation in making huge savings. This was by resolving investment problems and issues involving the East Coast Rail Link (ECRL) project , Felda, Tabung Haji and the Bandar Malaysia project.
“When we are trying to solve these problems, we are told that it is the wrong move,” he said.
Dr Mahathir said he was confident that the present government would be able to recover investment problems linked to mega development projects including the ECRL.
“As of now, we have tackled four major problems.
“The last administration had taken money, which could not be traced. And the government had to resolve it.”