Malaysia’s total debt rose to RM1 trillion or 69.7% of gross domestic product (GDP) as at end-June 2020, mainly contributed by net issuance of international bonds and notes from public enterprises and the private sector.
The Ministry of Finance’s (MoF) Fiscal Outlook 2021, however, noted that in general, Malaysia’s external debt position remains manageable. The external debt with medium- and long-term tenures accounted for 58.7% of total external debt, indicating low refinancing risk, the report highlighted.
The report also noted that the availability of sizeable external assets is able to cushion the impact of external risk, which in turn demonstrates the nation’s financial resilience.
The largest bulk of external debt was offshore borrowings, which increased to RM624.3 billion with a share of 62.2%, while medium- and long-term offshore borrowings accounted for RM383.2 billion, and short-term debt stood at RM241.1 billion, the report read.
“The increase was mainly contributed by higher non-financial corporation borrowings, primarily for foreign asset acquisitions and intra-group borrowings among banks and the non-banking private sector,” the report explained.
The increase in external borrowings, however, was partially offset by withdrawals from non-resident holdings of domestic debt securities and deposits, according to the report.
In contrast, non-resident holdings of ringgit-denominated debt securities and non-resident deposits amounted to RM295.4 billion or around 30% of total external debt, which among others included non-resident holdings of government papers that stood at RM181.2 billion or 22% of total federal government domestic debt. – TheEdge