KUALA LUMPUR, Nov 16 — Malaysia’s debt situation puts the country at risk of a crisis as it lacks the means to bail out imprudent borrowers or to protect against capital flight, The Economist said.
“Malaysia’s banks have lots of foreign liabilities, and its households have the highest debt-to-income ratio of any big emerging market; its cushion of foreign-exchange reserves looks thin and its current-account surplus is forecast to shrink,” the London-based publication said in an article published Saturday titled “The never-ending story”.
The Economist noted that some debt cycles end in crisis and recession, such as the eurozone and the US subprime crisis, while others merely result in slower economic growth.
Countries such as Singapore, China and South Korea, The Economist said, belong to the latter category.
The Economist’s warning about Malaysia came after Bank Negara accepted dollar deposits for the first time in September to shore up the country’s currency reserves amid a ringgit plunge.
International financial newswire Bloomberg reported last month that the ringgit fell to a 17-year low in September.
