KUALA LUMPUR: As at the end of 2014, the country’s external debt rose 6.9% to RM744.7 billion or 69.6% of the gross domestic product (GDP) from RM696.6 billion (or 70.6% of GDP) at the end of 2013, the Ministry of Finance (MoF) said in a statement yesterday.

Prime Minister Datuk Seri Najib Razak’s written reply on Wednesday to PKR’s Selayang Member of Parliament William Leong Jee Keen’s question in Parliament stated that Malaysia’s external debt tripled from RM196 billion in late 2013 to RM744.7 billion by end 2014.

The Edge Financial Daily reported yesterday that Najib, who is Finance Minister, had said that the huge increase was due to the new defined terms for the country’s external debt that came into play since 2014.

In its statement yesterday evening, the MoF said the federal government’s debt position remains manageable and Malaysia has been categorised as a country with moderate indebtedness.

“At the end of 2014, the total federal government’s debt in domestic and offshore [sectors] amounted to RM582.8 billion or 54.5% of GDP. “Of these, 97.1% or RM566.1 billion is domestic debt, while the remaining RM16.8 billion or 2.9% is offshore debt,” the ministry said. 

The government remains committed to ensuring that the federal government debt levels do not exceed 55% of GDP, it added.

In accordance with the International Monetary Fund’s reporting requirements of international debt, the MoF noted that Malaysia’s external debt position is calculated based on the new definition, which consists of offshore borrowings by the federal government, public enterprises and the private sector; and holdings of debt securities, deposits and loans denominated trading by non-residents (foreign holders).

It noted that of the RM744.7 billion in external debt, 42% consisted of debt securities holdings and deposits by non-residents; 37% private sector debt; 10% debt of public enterprises; 9% trade credit and other loans, and 2% offshore debt of the federal government.

“External debt based on [the] new definition reflects the level of holdings of debt securities and deposits denominated in ringgit by non-residents is high, representing more than 40% of the total external debt.  

“This is due to the depth, transparency (openess) and attractiveness of the Malaysian financial market,” it said.

This article first appeared in The Edge Financial Daily, on March 13, 2015.