KUALA LUMPUR, Dec 13 — Malaysia’s household and government debts are "high” but remain "stable,” international ratings agency Moody’s said today in a frequently asked questions (FAQ) on the country’s external vulnerability.

In its note, Moody’s said that the country is exposed to a potential "sharp and negative” change in external financing conditions due to its reliance on foreign financing.

"Nevertheless, its resilient economic growth, deep domestic capital markets, large international asset position and large export proceeds mitigate the sovereign's vulnerability to sudden shocks,” it said.

It said that Malaysia has insufficient reserves to meet maturing external debts.

"Moody's points out that Malaysia's reserves are insufficient to meet maturing external long-term debt repayments and short-term debt. Nonetheless, a sizeable net asset position, large export proceeds, and deep domestic capital markets moderate external vulnerability,” it added.

Malaysia’s high household debt rate at 84.6 per cent of its Gross Domestic Product also poses a downside risk, it said.

"Nevertheless, such debt does not pose material threats to financial stability. Households have large liquid financial assets to buffer the impact of a potential shock to debt servicing capacity,” it said.

However, Malaysia is expected to maintain its strong growth trends in the next year, Moody’s said.

"The economy's long-term potential growth should stay robust at around 5.0 per cent, which would be significantly stronger than most other A-rated sovereigns,” it said.

Malaysia has been rated A3 by Moody’s with a stable outlook.