Malaysia Maintains Net Creditor Status, External Position Remains Strong: PM Anwar

Kuala Lumpur, The Gulf Observer: Malaysia continues to maintain its status as a net creditor nation, underpinned by strong external resilience and substantial non-reserve foreign currency assets held by domestic corporates and financial institutions, Prime Minister Datuk Seri Anwar Ibrahim said.

In a written parliamentary reply dated Tuesday (18 November), Anwar, who also serves as Finance Minister, stated that Malaysia’s Net International Investment Position (NIIP) remained positive at RM77.3 billion, equivalent to 3.9% of gross domestic product (GDP) as of the end of the third quarter of 2025.

“This clearly shows that Malaysia remains a net creditor nation,” he said, highlighting that large external non-reserve assets provide an additional buffer to the country’s ability to meet foreign currency obligations.

The Prime Minister was responding to a question from Datuk Seri Hamzah Zainudin (PN-Larut) regarding government measures to maintain the country’s capacity to manage external debt, noting that Bank Negara Malaysia’s international reserves as of August could cover only 4.8 months of import requirements and 0.9 times short-term external debt.

Anwar stressed that Malaysia’s capacity to meet external requirements and repay short-term external debt “remains strong.” He added, “Bank Negara Malaysia’s gross international reserves are fully usable and sufficient to support its mandate in ensuring orderly functioning of the foreign exchange market. At the same time, corporates and financial institutions have built up significant non-reserve external assets that can be mobilised to meet foreign-currency commitments.”

As of 31 October, Malaysia’s reserves stood at US$123.8 billion (RM521.6 billion), comfortably exceeding international adequacy thresholds of three months of retained imports and covering 0.9 times short-term external debt. The reserves also stood at 104% of the International Monetary Fund’s (IMF) Assessing Reserve Adequacy (ARA) metric.

Regarding Malaysia’s overall external debt, Anwar noted that risks remain contained. He said total external debt amounted to RM1.4 trillion, or 69.4% of GDP, at the end of the third quarter, a level assessed as safe and non-detrimental to the country’s economic outlook.

He explained that the IMF’s Debt Sustainability Framework considers external debt risky only when paired with large short-term borrowings, heavy exposure to foreign-currency loans, and persistent current account deficits—conditions that do not apply to Malaysia. About 56.9% of Malaysia’s external debt consists of medium- and long-term borrowings, reducing refinancing risks.

Short-term external debt risks also remain manageable, Anwar added, with much of it falling under Bank Negara’s prudential requirements and backed by strong export earnings. The federal government’s external debt is small, making up less than 3% of Malaysia’s overall foreign-currency-denominated debt. Most government borrowings are ringgit-denominated, insulating them from currency mismatch risks.

“This reinforces the view that Malaysia’s external position is healthy, resilient and responsibly managed,” Anwar concluded.