External debt at 64.7 pct of GDP at end-Dec 2018

KUALA LUMPUR: Malaysia’s external debt stood at RM924.9 billion or 64.7 per cent of gross domestic product (GDP) as at end-December 2018, said Bank Negara Malaysia (BNM) in its Fourth Quarter 2018 Quarterly Bulletin released yesterday.

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

BNM 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,” BNM said.

BNM 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 per cent), mainly in the form of non-resident holdings of domestic debt securities (62.7 per cent share) and in ringgit deposits (17.9 per cent 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 RM637.4 billion or 68.9 per cent of total external debt is denominated in foreign currency (FC) comprising predominantly of offshore borrowing, which at end-December 2018 declined to RM566.9 billion or 39.7 per cent of GDP (end-September 2018: RM570.3 billion or 39.9 per cent of GDP).

Long-term bonds and notes issued offshore stood at RM152.7 billion as at end-December 2018, accounting for 24.0 per cent 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