Malaysia's external debt up to RM1.12 trillion due to exchange rate

KUALA LUMPUR: Malaysia's external debt increased to RM1.128 trillion or 65.9 per cent of the Gross Domestic Product (GDP), mainly contributed by higher interbank borrowings and the foreign currency exchange rate valuation effects following the ringgit's depreciation especially against the US dollar.

In 2021, it stood at RM1.082 trillion or 70 per cent of GDP.

The nation's external debt constitutes the public and private sector offshore borrowings, non-resident holdings of ringgit-denominated debt securities, non-resident deposits as well as other external debt.

As at end-June 2022, offshore borrowings - the largest component of external debt - amounted to RM620.5 billion or 55 per cent of the total external debt, the Finance Ministry (MoF) said.

This is largely attributed to the net foreign currency-denominated issuances by the non-financial corporations, the ministry revealed in its 2023 Fiscal Outlook and Federal Government Revenue Estimates report released today.

Meanwhile, the share of non-resident holdings of ringgit-denominated debt securities has slightly fallen to 22.4 per cent (2021: 23.6 per cent). The reduction was due to non-resident investors liquidating their holdings in domestic papers in repositioning their investment portfolio.

Furthermore, these liabilities were not affected by the volatility of the ringgit against other currencies.

Overall, the country's external debt remained manageable given its favourable maturity profile, with medium- and long-term debt constituting a higher share at 60 per cent than short-term debt (40 per cent).

Sufficient coverage through foreign currency reserves mitigates the refinancing risk of the short-term external liabilities.

-- BERNAMA