Malaysia's Financial Fundamentals Draw IMF Praise

Barnama

22-07-2025

REGION - SARAWAK > NEWS
KUALA LUMPUR, July 23 (Bernama) -- Malaysia's financial strength and market flexibility support resilience against external shocks and capital outflows, according to the International Monetary Fund (IMF).
These factors, including Malaysia's strong balance sheet, position the country well to navigate global financial volatility without major disruption, the IMF stated in its 2025 External Sector Report, released in Washington on Monday.
The IMF said that Malaysia's net international investment position (NIIP) is expected to increase over the medium term, supported by projected current account surpluses.
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'Malaysia's NIIP has averaged about 2.6 per cent of gross domestic product (GDP) over the last decade, increasing to 5.4 per cent at the end of 2023, supported by strong current account surpluses during the pandemic that helped increase reserve assets,' said IMF.
It highlighted that the NIIP then declined to -0.6 per cent of GDP at the end of last year because of an increase indirect and portfolio investment liabilities. At the same time, total external debt increased to 69.7 per cent of GDP at the end of 2024, compared to 68 per cent at the end of 2023, and remains manageable.
One-third of the external debt is denominated in ringgit, which means it is not subject to valuation risks, the IMF noted. Additionally, short-term external debt, making up 42.8 per cent of the total external debt, is considered manageable.
The IMF said this is primarily because most of it consists of intragroup borrowing among banks and corporations — an arrangement that tends to be stable — or trade credits that are backed by export earnings.
It emphasised that Malaysia's external position in 2024 was assessed to be moderately stronger than the level implied by medium-term fundamentals and desirable policies.
After falling in 2023 amid a challenging external environment, the country's current account surplus fell slightly in 2024, as higher intermediate and capital goods imports outweighed higher exports due to an upturn in the global semiconductor cycle, it added.