TOKYO • Japan is ready to extend Malaysia support to help overcome its financial problems if the need arises, Malaysian Prime Minister Mahathir Mohamad said yesterday.
"Prime Minister (Shinzo) Abe assured us that if, in future, we have a need to seek Japanese support in solving our financial problems, he's ready and the Japanese government is ready to consider (it)," Tun Dr Mahathir told a news conference on the second day of his three-day visit to Japan, reported Reuters.
Malaysia last week announced an expanded budget for 2019 and forecast a wider fiscal deficit, as Dr Mahathir's administration grapples with shrinking revenue and a large debt left by its predecessor.
A senior Japanese official said Tokyo plans to help Malaysia issue yen-denominated Samurai bonds worth 200 billion yen (S$2.4 billion) that would be guaranteed by the Japan Bank for International Cooperation (JBIC).
Such Samurai bonds can be issued with relatively low interest rates and thus can help the country tackle its fiscal problems, the official said, according to The Japan Times.
Mr Abe, speaking at the news conference with Dr Mahathir, said: "It was confirmed that we would aim for the issuance (of Samurai bonds) guaranteed by the JBIC." The bonds are expected to be issued before March next year, Bernama reported.
Malaysia's new government has said it inherited a debt of RM1.1 trillion (S$362.5 billion) as of the end of last year. In his budget speech last Friday, Malaysian Finance Minister Lim Guan Eng said the debt level "was caused by financial scandals masquerading as investments and mega loans as mega projects", citing examples such as state fund 1Malaysia Development Berhad's RM51 billion debt pile and the RM81 billion East Coast Rail Link.
Dr Mahathir said last Friday that the Samurai bonds would be used to retire some of the costly loans taken by the previous government.
Mr Abe said a team of experts from Japan's railway firms would be dispatched to Malaysia at the end of this month as part of a study.
"I told Dr Mahathir that Japan will study with Malaysia the possibility of extending yen loans with primary focus on transportation, education and human resource development. I hope this study will lead to concrete cooperation in future," he was quoted as saying by The Star.