KUALA LUMPUR: Malaysia’s financial and banking system can withstand any economic challenges, Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar said yesterday.

“As a former banker, I can confirm that our financial and banking system is one of the best that is being managed and supervised by Bank Negara Malaysia,” he told Parliament when replying to a question by Parit member of Parliament Mohd Zaim Abu Hasan.

Mohd Zaim in a written question to Datuk Seri Najib Razak had asked the prime minister to state whether the country’s economy could be hit or suffer systemic failure due to the current global economic uncertainty.

Although there is an increase in the country’s debt-to-gross domestic product (GDP) ratio which now stands below the self-imposed limit of 55%, Abdul Wahid pointed out that the debts were taken for the purpose of supporting the country’s development expenditure.

Furthermore, these debts were mostly ringgit denominated, he said.

“Ninety-seven per cent of the country’s debt is ringgit denominated with only 3% in foreign currencies,” he added.

It was reported that Malaysia has one of Asia’s highest debt-to-GDP ratios at 52.8%, a shade below the self-imposed limit of 55%, while its household debt is at 86.8% of GDP, which is ranked second highest in Asia.

The country’s international reserves as of March 13, 2015, stood at RM381.5 billion or U$109.2 billion, Abdul Wahid said.  

This reserves position is sufficient to finance 7.8 months of retained imports and is 1.1 times the short-term external debt, he added.

This article first appeared in The Edge Financial Daily, on April 2, 2015.