Kuala lumpur: Malaysia’s Ministry of Finance (MoF) has assessed the nation’s external debt risk as manageable, buoyed by a favorable maturity and currency profile.
According to BERNAMA News Agency, the MoF reported that the external debt reached RM1.4 trillion, accounting for 69.4% of the gross domestic product (GDP) at the conclusion of the third quarter of 2025.
The MoF assured that this level of external debt is manageable and poses no threat to the country’s economic outlook. Based on the International Monetary Fund’s (IMF) Debt Sustainability Framework, external debt risk could become a concern if it coincides with substantial short-term debt, significant foreign currency loan exposure, and a current account deficit. However, the ministry emphasized that such risks are absent in Malaysia’s current financial context.
The MoF highlighted that, as of the third quarter of 2025, 56.9% of external debt was classified as medium and long-term, thereby reducing the risk of refinancing challenges. This statement was part of a written response on the Parliament website to a query from Datuk Seri Hamzah Zainudin (PN-Larut) regarding the government’s measures to ensure the nation’s ability to manage external debt. This concern arose from the fact that Bank Negara Malaysia’s (BNM) international reserves as of August 2025 covered only 4.8 months of import requirements and 0.9 times short-term external debt.
As of October 31, 2025, BNM’s international reserves stood at US$123.8 billion (RM521.6 billion), surpassing the international minimum adequacy threshold of three months and covering 0.9 times the total short-term external debt. The reserves were also adequate at 104% based on the IMF’s Assessment of Reserve Adequacy metric, which more comprehensively considers various aspects of reserve sufficiency.
The MoF noted that the federal government’s external debt is minimal, constituting less than three percent of the total foreign currency-denominated external debt. A significant portion of this debt is denominated in ringgit, safeguarding it from currency risks. The MoF emphasized that international reserves are not the sole means of fulfilling external obligations such as debt repayment.
In light of the gradual liberalization of foreign exchange policies, Malaysian corporations and financial institutions have amassed substantial non-reserve external assets, which can be deployed to meet foreign currency financial commitments without solely relying on international reserves. From an external resilience perspective, the MoF affirmed that Malaysia has a considerable stockpile of non-reserve foreign currency external assets, underpinning a positive net international investment position of RM77.3 billion, or 3.9% of GDP at the end of the third quarter of 2025.
In conclusion, the MoF reiterated that Malaysia remains a net creditor country, reinforcing its external financial stability.