1MDB’s financial obligations stand at RM31.6b as of end-June 2022

The 1MDB is estimated to have outstanding financial obligations of RM31.6 billion as of end-June 2022, comprising debt principals of RM25.9 billion and projected interests or profits of RM5.7 billion.

According to the 2023 Fiscal Outlook and Federal Government Revenue Estimates report released today, the Finance Ministry said the outstanding debt of 1MDB has been reduced to RM25.9 billion following the settlement of the debt obligation of 1MDB Energy Ltd in May 2022.

The government’s initiatives to recover 1MDB’s assets involve extensive joint investigation works, negotiations as well as initiation of litigation processes.

The ministry said the repatriation of the assets totalled RM19.3 billion as of end-June 2022. Several main assets that have been recovered and repatriated included seized physical assets and monies as well as settlement payments with the United States Department of Justice; proceeds from the settlement with particular parties, namely financial institutions and audit firms; and the recovery of frozen cash assets from individuals and companies.

"These recovered assets, which were placed into the Asset Recovery Trust Account, have been utilised to meet 1MDB’s financial obligations and debt repayment.

“The remaining balance in the Trust Account of about RM8.8 billion as of end-June 2022 will be prioritised for the upcoming settlement of 1MDB Energy (Langat) Ltd’s bond in October 2022," it said.

Furthermore, the former arranger of 1MDB's bond issue, Goldman Sachs, has also agreed to a settlement amounting to US$2.5 billion and will provide assistance to the government in guaranteed asset recovery estimated at US$1.4 billion.

GDP

Meanwhile, Malaysia’s external debt increased to RM1.128 trillion or 65.9 percent of the Gross Domestic Product (GDP), mainly contributed by higher interbank borrowings and the foreign currency exchange rate valuation effects following the ringgit’s depreciation, especially against the US dollar.

READ MORE: Budget 2023: The big picture

In 2021, it stood at RM1.082 trillion or 70 percent of GDP.

The nation's external debt constitutes the public and private sector offshore borrowings, non-resident holdings of ringgit-denominated debt securities, non-resident deposits as well as other external debt.

As of end-June 2022, offshore borrowings - the largest component of external debt - amounted to RM620.5 billion or 55 percent of the total external debt, the Finance Ministry said.

This is largely attributed to the net foreign currency-denominated issuances by non-financial corporations.

Meanwhile, the share of non-resident holdings of ringgit-denominated debt securities has slightly fallen to 22.4 percent (2021: 23.6 percent). The reduction was due to non-resident investors liquidating their holdings in domestic papers in repositioning their investment portfolio.

Furthermore, these liabilities were not affected by the volatility of the ringgit against other currencies.

Overall, the country's external debt remained manageable given its favourable maturity profile, with medium- and long-term debt constituting a higher share at 60 percent than short-term debt (40 percent).

Sufficient coverage through foreign currency reserves mitigates the refinancing risk of short-term external liabilities.

- Bernama

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