External debt backed by large availability of external assets
MALAYSIA’S external debt remains manageable, backed by the large availability of banks’ and domestic companies’ external assets, which provide a buffer against external risks.
The government noted that in addition, medium and long-term tenure accounted for 58.3% of the country’s total external debt, reflecting a lower refinancing risk.
External debt refers to the offshore obligations of the country’s public and private sectors, which include offshore borrowings, non-resident holdings of ringgit denominated debt securities, and non-resident deposits.
As at end-june 2019, the country’s external debt stood at Rm931.1bil or 61.3% of GDP.
“The slight increase in total external debt was contributed by a sizeable increase in medium and longterm offshore borrowings primarily by the private sector, but was offset by withdrawal in non-resident deposits,” the government said in the 2020 Fiscal Outlook and Federal Government Revenue Estimates report.
Offshore borrowings
It said offshore borrowings, which was the largest component of Malaysia’s external debt, had increased to Rm580.5bil or 38.2% of GDP.
Non-resident holdings of ringgit denominated debt securities, meanwhile, remained stable at Rm181.9bil or 12% of GDP.
The government said the country’s public sector debt had increased to RM1.1 trillion or 76.2% of GDP due to higher government debt to finance the fiscal deficit. 1 Include private sector and public corporations.
2 Comprise trade credits, IMF allocation of Special Drawing Rights and miscellaneous. 3 End-june 2019.
Note: Total may not add up due to rounding.
Government debt, it said, remained the largest component, accounting for 69.1% of total debt, while for the balance – 24.8% was from non-financial public corporations (NFPCS) and statutory bodies (6.1%).
Public sector debt refers to outstanding debt from all layers of the government, including state governments and sovereign-guaranteed debts of statutory bodies.
The report noted that statutory bodies’ net debt had expanded due to additional sukuk issuances by the Public Sector Home Financing Board and the National Higher Education Fund Corp.
The higher NFPCS debt, meanwhile, was due to further drawdown for ongoing infrastructure projects, particularly the mass rapid transit, the extension of the light rail transit line and the construction of rail tracks as well as investments into the oil and gas and energy sector.