The claim that Malaysia owes a lot of money to Indonesia is not true as only 2.5 percent of federal government debts are foreign-denominated, said Finance Minister Tengku Zafrul Abdul Aziz.
The foreign loans are from various institutions and investors from around the world, among them the United States, Europe, Japan, China, and Singapore.
“So the 2.5 percent of foreign loans cannot all be from Indonesia, it’s not logical. And the remaining 97.5 percent of the national debt are domestic loans,” he said in a video that was uploaded on Twitter yesterday.
Zafrul explained that government borrowings are different from loans made by individuals.
“One of the ways governments borrow money is through a bond issuance whereby investors will make bids for the rate of return or yield, as well as the amount wanted.
“Investors who bid the lowest rate of return but with the highest loan amount will be selected,” he said.
He added that it is rare for a country to make a direct loan from another country.
- Bernama
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