KUALA LUMPUR, Oct 12 — Government bonds for borrowing should be issued domestically and sold to Bank Negara Malaysia, says an economist.

Jomo Kwame Sundaram said this will help minimise the cost of borrowings and spending.

"There’s absolutely no reason why we need to go abroad,” he said, adding that the move may undermine the whole purpose of raising money.

Jomo said this at the Malaysian Economic Summit 2020 organised by the Kingsley Strategic Institute for Asia Pacific and The Economic Club of Kuala Lumpur today.

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz had previously said that the government would not issue foreign currency bond and instead opted to raise funds by borrowing locally through the domestic debt market to fund Covid-19 relief efforts.

So far, the government has launched RM305 billion in stimulus packages to support the Covid-19-hit economy.

Sukuk Prihatin, a government initiative under the National Economic Recovery Plan (Penjana), was oversubscribed when it was closed on Sept 17, registering a total subscription of more than RM666 million.

This has surpassed its initial target issuance size of RM500 million. In response to the encouraging demand from eligible subscribers, the government decided to upsize the total issuance by an additional RM166 million. — Bernama