Finance minister: Govt borrowing cost increases to RM830m a year due to EPF withdrawals of RM101b | Malay Mail

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Finance minister: Govt borrowing cost increases to RM830m a year due to EPF withdrawals of RM101b

KUALA LUMPUR, March 14 — The negative impact from portfolio balancing by the Employees Provident Fund due to withdrawals by its members has caused the borrowing cost of the government to increase due to added interest payments amounting to RM830 million a year.

Tengku Zafrul said this was because the interest rates of Malaysian Government Securities have increased by an average of 100 basis points compared to the third quarter of 2020. The minister said portfolio balancing by the EPF will give a negative impact on domestic bond and equity markets. Tengku Zafrul said if a one-off withdrawal of RM10,000 is allowed, the number of eligible members who would make withdrawals might reach 6.3 million, involving additional withdrawals of more than RM63 billion.

“This will also affect EPF’s role to provide liquidity for the government bond market where the government’s borrowing cost will rise, and it has risen 100 basis points,” he noted.

 

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