Malaysia's external debt lower at 64.7% of GDP at end-2018

AmBank Research expects Bank Negara Malaysia

KUALA LUMPUR: Malaysia's external debt stood at RM924.9bil or 64.7% of gross domestic product (GDP) as at end-December 2018, said Bank Negara Malaysia in its Fourth Quarter 2018 Quarterly Bulletin released on Thursday.

At end-September 2018, the external debt stood at RM933.3 billion or 65.3% of GDP.

Bank Negara said the lower external debt reflects net repayment of interbank borrowing and trade credits, as well as some liquidation of domestic debt securities by non-resident investors.  

“There was also the refinancing of several loans with equity capitalisation by related companies during the quarter and these were partially offset by the increase in non-resident deposits as well as a net issuance of bonds and notes offshore,” Bank Negara said.

Bank Negara said the country's external debt remains manageable, given its currency and maturity profiles, and the presence of large external assets.

Close to one-third or 31.1% per cent of external debt is denominated in the ringgit (end-September: 31.3%), mainly in the form of non-resident holdings of domestic debt securities (62.7% share) and in ringgit deposits (17.9% share) in domestic banking institutions.

“As such, these liabilities are not subject to valuation changes from the fluctuations in the ringgit exchange rate,” the central bank said.

The remaining external debt of RM637.4bil or 68.9% of total external debt is denominated in foreign currency (FC) comprising predominantly of offshore borrowing, which at end-December 2018 declined to RM566.9bil or 39.7% of GDP (end-September 2018: RM570.3bil or 39.9% of GDP).

Long-term bonds and notes issued offshore stood at RM152.7bil as at end-December 2018, accounting for 24% of total FC-denominated external debt, mainly by non-financial corporations and channelled primarily to finance asset acquisitions abroad.

As at Jan 31, 2019, international reserves stood at US$102.1 billion, sufficient to finance 7.4 months of retained imports, and is 1.0 time the short-term external debt.- Bernama