KUALA LUMPUR (Nov 2): Malaysia’s external debt increase 6.45% to RM936.5 billion or 65.4% of the gross domestic product (GDP) as at end of June 2018, from RM500.9 billion or 37% of GDP at the end of 2017, due to higher loans by the non-financial corporations segment to finance investment activity.

According to the Economic Report 2018/2019 titled Fiscal Outlook 2019, the bulk of the total external debt is offshore borrowings which stood at RM586.5 billion or 41% of GDP (increase of 17.1%), compared with RM500.9 billion or 37% of GDP as end of 2017. This was due to additional short-term debt and public corporations’ medium- and long-term debt.

In contrast, non-resident holdings of ringgit denominated debt securities declined about 10.74% to RM185.1 billion or 12.9% of GDP as at end of June 2018, from RM207.4 billion or 15.3% of GDP, due to expectations of a faster pace of monetary policy normalisation in the US and the rise of global trade tensions.

Nevertheless, the report noted external debt was well-spread across different maturity profiles, comprising 48% of short-term papers, while medium- and long-term papers constituted 52% of the total.