Finance Ministry says country’s debt manageable

The government is committed to ensuring the Federal Government's debt does not exceed 55 per cent of GDP.

KUALA LUMPUR: The Federal Government’s external debt position is manageable and puts the country in the moderately indebted category, says the Finance Ministry.

At end of 2014, the Federal Government’s domestic and offshore debts totaled RM582.8 billion or 54.5 per cent of Gross Domestic Product, the Ministry said in a statement today.

Of the total debt, 97.1 per cent or RM566.1 billion constituted domestic debt while the remaining RM16.8 billion or 2.9 per cent was in offshore loans, it said. It also said that the government is committed to ensuring the Federal Government’s debt does not exceed 55 per cent of GDP.

In line with international debt reporting requirements according to International Monetary Fund (IMF) conventions, Malaysia’s external debt situation under the new definition now comprises of offshore borrowings by the Federal Government, public enterprises and the private sector, as well as holdings of debt securities, deposits and trade credits denominated in ringgit by non-residents.

At the end of 2014, Malaysia’s external debt stood at RM744.7 billion or 69.6 per cent of GDP, compared to RM696.6 billion or 70.6 per cent in 2013, it said. Of the total, 42 per cent comprised holdings of debt securities and deposits by non-residents; private sector debt (37 per cent); public enterprise debts (10 per cent); trade credits and other loans (nine per cent) as well as the Federal Government’s offshore loans (2 per cent).

The country’s external debt under the new definition reflects the high level of non-residents’ holdings of ringgit-denominated debt securities and deposits, comprising over 40 per cent of Malaysia’s external debt, it said.

“This is due to the wider depth, openness and attractiveness of the Malaysian financial market,” it added. Malaysia’s financial market has grown rapidly due to the progress in liberalisation of the financial sector, it said, while pointing out that the Federal Government’s offshore loans comprise only a very small proportion of total external debt.

The size of the government’s offshore loans has not changed and remained small at RM16.8 billion or 1.6 per cent of GDP, the ministry said.

-BERNAMA