KUALA LUMPUR, July 9 — The Finance Ministry today announced the approval of a government guarantee for the Federal Land Development Authority (Felda) issue up to RM9.9 billion sukuk.

The ministry also said the funds aim to cancel the settlers’ RM8.3 billion debts.

"Starting from the year 2023, the government has provided allocations of up to RM1 billion annually to enable the redemption of Felda sukuk that among other things, funds the write-off of settlers’ debts,” the ministry said in a brief statement.

Sukuk is the Islamic version of bonds.

The ministry said the move shows the Anwar government’s commitment to restore Felda’s financial position.

On July 7, Prime Minister Datuk Seri Anwar Ibrahim announced the government's approval of a yearly allocation of up to RM1 billion for 10 years to Felda to ensure its survival and to enable the delayed sukuk financing to continue.

National news agency Bernama has reported that Felda owes a principal sum of some RM7.9 billion to several financial institutions.