Malaysia's External Debt Remains Manageable, Says Central Bank

KUALA LUMPUR, March 24 (Bernama) -- Malaysia's external debt remains manageable, with the profile remaining healthy and more than half skewed towards medium- to long-term tenures, says Bank Negara Malaysia (BNM or Malaysia's Central Bank). Risks from foreign exchange fluctuations are largely contained as about 36 per cent of the external debt is Malaysian ringgit denominated while the foreign currency denominated debt is largely hedged, it said. Meanwhile, the debt service ratio remained low at 22.6 per cent in 2015 (2014: 19.1 per cent), the central bank said in its 2015 Annual Report released here Wednesday. It said Malaysia's external debt remained manageable throughout 2015 with the external debt standing at RM833.7 billion, equivalent to US$192.2 billion or 72.1 per cent of Gross Domestic Product (GDP) as at end-2015 (end-2014: RM747.5 billion, equivalent to US$211.8 billion or 67.5 per cent of GDP). "The rise in the external debt by 11.5 per cent in 2015 was mainly due to valuation effects from the depreciation of the ringgit against most currencies during the year. "Excluding the foreign exchange revaluation changes, offshore borrowing increased at a more moderate pace of 4.0 per cent in 2015, contributing two percentage points to the overall increase in the external debt," it said. These borrowings were mainly a reflection of the net drawdown of intercompany borrowings by several private corporations in the oil and gas sector, and new issuances of international debt securities. Being a highly open economy, Malaysia is not insulated from the heightened uncertainties and risks from external developments, BNM said. However, Malaysia has demonstrated its ability to withstand external shocks through economic flexibility and the safeguards provided by the financial buffers and robust policy frameworks that have been built over the course of many years, it added. --BERNAMA