Malaysia's external debt more than triples to RM740b in 3Q2014

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KUALA LUMPUR (Mar 11): Malaysia's external debt more than tripled to RM740 billion in the third quarter of 2014 (3Q2014) from RM196 billion at the end of 2013, said Prime Minister Datuk Seri Najib Razak.

"Total external debt grew to RM740 billion for 3Q2014 from RM41.5 billion in 1990 and RM196 billion at the end of 2013," said Najib, who is also the finance minister, in his written answer in parliament to PKR’s Selayang Member of Parliament William Leong Jee Keen today.

He attributed the huge jump in the country's external debt to a redefinition of external debt that came into force last year.

Under the redefined term, external debt comprises offshore borrowing by the federal government, public enterprises and the private sector as well as non-resident holdings of ringgit denominated debt securities, non-resident deposits and trade credit.

Najib also said about two-thirds of the increase in 3Q2014 was due to foreigners holdings of Malaysian bonds, now considered part of the external debts.

Najib also noted that the country's debt stood at RM582.8 billion, or 54.5% of the gross domestic product (GDP), as of end-December 2014.

Of the total, 97.1% or RM566.1 billion was domestic debt, while the balance of RM16.8 billion or 2.9% was offshore loans.

"The federal government's debt position remains manageable and (is) categorised as a moderate-indebtedness country," he said, adding that the government remained committed to ensuring its debt did not exceed 55% of the GDP.

To recap, the International Monetary Fund (IMF) had proposed a wider coverage for external debt, which takes into account non-resident holdings of local-currency denominated debt papers and other debt-related non-resident financial flows, such as trade credits, currency and deposits, and other loans and liabilities.

Under this definition, external debt would include all liabilities that require payment of principal and/or interest at some point in the future, and are owed to non-residents by residents of an economy irrespective of the currency denomination of the debt.

It was reported that Malaysia now has the second highest external debt burden among Asia’s developing nations.