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Kuala Lumpur: Malaysia plans to conduct 19 bond sales next year to help raise funds for development projects and fin-ance its budget deficit.

The government will sell notes maturing in 2013, 2015, 2017, 2019, 2020 and 2030, comprising both conventional and Islamic securities, according to a sale calendar published by Bank Negara Malaysia on its website. The central bank, which conducts debt auctions on behalf of the treasury, didn't provide details on the amount to be raised at each debt sale.

Malaysia raised a record 88.5 billion ringgit (Dh95.42 billion) this year, a 48 per cent increase from 2008 and the most since records began in 1991.

It will step up "fiscal discipline" next year to help narrow the deficit to 40.5 billion ringgit, or 5.6 per cent of gross domestic product, the finance ministry said in October.

Prime Minister Najib Razak has unveiled 67-billion ringgit of stimulus measures in the past year and the central bank has maintained its overnight policy rate at 2 per cent since February to help the nation climb out of its recession. The government also raised 5 billion ringgit from the sale of 2012 bonds to retail investors in May.

The finance ministry estimated the budget shortfall for 2009 at 51.1 billion ringgit, or 7.4 per cent of GDP, the highest proportion since 1987. Islamic debt, or sukuk, pays a profit rate to investors from an underlying asset instead of interest, which is prohibited by Sharia.

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KUALA LUMPUR: The Central Bank of Malaysia Act 2009 came into force yesterday, enabling Bank Negara to more effectively manage emerging risks and challenges.

With this, the Central Bank of Malaysia Act 1958 is repealed and thus ceased to apply, the central bank said in a statement yesterday.

The new Act provided greater clarity on the central bank’s mandate and vested it with the necessary powers and instruments to achieve this mandate, it said.

Specific powers for macro-prudential financial stability which to date had not been a common feature of traditional central banking legislation are now included in the Act.

These provisions, among others, supported increased surveillance, regulatory reach, oversight of money and foreign exchange markets and coordination with other regulators, including across borders, on crisis prevention, management and resolution, the statement added.

Consistent with the goal to promote Malaysia as an international centre for Islamic finance, the Act gave due recognition to the Islamic financial system in the country, Bank Negara said, adding that it provided for an enhanced role of the Syariah Advisory Council on Islamic Finance to facilitate consistent application of Islamic law on Islamic financial matters.

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Malaysia’s central bank held interest rates steady at 2.0 per cent today for a sixth straight time, and said the pace of recovery in the domestic economy was gaining momentum and inflation was expected to remain modest in 2010.

The widely-expected decision comes as Asia’s third-most trade dependent economy is recovering from an economic slump triggered by the global financial crisis. A pick-up in domestic demand helped the economy to contract less-than-expected 1.2 per cent in the third quarter.

“As price pressures and inflation expectations are expected to remain contained going forward, the assessment is that the current monetary policy stance is appropriate and will continue to provide support for economic activity,” the central bank said in a statement.

A Reuters poll showed 15 economists saying rates would be held at 2 per cent with the earliest sign of a hike coming after the first half of next year. -- Reuter

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