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Government Debt Securities
Definition of Government Securities

Malaysian Government securities are marketable debt instruments issued by the Government of Malaysia to raise funds from the domestic capital market to finance the Government's development expenditure and working capital. The central bank, Bank Negara Malaysia in its role as banker and adviser to the Government, advises on the details of Government securities issuance and facilitates such issuance through various market infrastructures that it owns and operates. Currently, the various forms of Government securities in Malaysia are:-

Malaysian Government Securities (MGS) - long-term interest-bearing bonds issued by the Government of Malaysia to raise funds from the domestic capital market for development expenditure.
Malaysian Treasury Bills (MTB) - short-term securities issued by the Government of Malaysia for working capital.
Government Investment Issues (GII) and Malaysian Islamic Treasury Bills (MITB) - long-term and short-term non interest-bearing Government securities, which are issued based on Islamic principles by the Government of Malaysia.

Objective of issuance

MGS were initially issued to meet the investment needs of the Employees Provident Fund (EPF), local banks and insurance companies. In the late 1970s and early 1980s, MGS were issued to finance the public sector's development expenditure. In contrast, by the 1990s, the purpose of MGS issuance was extended to funding part of the Government's budget deficit and prepayment of some of the Government's external loans. The Government continued to issue MGS during the fiscal surplus of 1993-1997 to meet the market demand for MGS.

GII and MITB, on the other hand, were issued to allow Islamic banks to hold liquid papers that meet their statutory liquidity requirements. The issuance of these papers also enabled them to invest their liquid funds in instruments that are issued based on Shariah principles as they are unable to purchase or trade in Malaysian Government Securities (MGS), Malaysian Treasury Bill (MTB) or other interest-bearing instruments.
Last Updated : 21/06/2011 17:44 PM