Friday 29 Mar 2024
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KUALA LUMPUR (Feb 14): Malaysia’s external debt increased to RM883.4 billion or 65.3% of gross domestic product (GDP) as at end-December 2017, versus RM873.8 billion or 64.6% of GDP as at end-September 2017, said Bank Negara Malaysia (BNM).

BNM attributed the increase to a rise in loans, interbank borrowing and non-resident (NR) holdings of domestic debt securities, partially offset by valuation effects amid the strengthening of the ringgit against several major and regional currencies.

The central bank said the external debt level remains manageable.

“Malaysia’s external debt remains manageable given its currency and maturity profiles, as well as the availability of large external assets.

“More than one-third of total external debt is denominated in ringgit (34.3%), mainly in the form of NR holdings of domestic debt securities and in ringgit deposits in domestic banking institutions.

“As such, these liabilities are not subjected to valuation changes from the fluctuations in the ringgit exchange rate,” said the bank.

Meanwhile, the remainder of external debt of RM580.7 billion is denominated in foreign currency, comprising mostly offshore borrowings, raised mainly to expand productive capacity and to better manage financial resources within corporate groups.

The central bank highlighted that offshore borrowing remained low at 37.5% of GDP, compared with 60% of GDP during the Asian Financial Crisis.

Out of the total foreign currency-denominated external debt, about one-third (RM211.6 billion) is accounted by interbank borrowing and foreign currency deposits in the domestic banking system, followed by long-term bonds and notes issued offshore (RM154.2 billion).

Looking at maturity, BNM said 57.3% of total external debt was medium- to long-term tenure, suggesting limited rollover risks.

On international reserves, the central bank said it accounts for about a quarter of total external assets, with the remainder held by banks and corporations.

“As at Jan 30, 2018, international reserves is 1.1 times the short-term external debt and is sufficient to finance 7.2 months of retained imports,” said BNM.

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