Decline in BNM’s international reserves worrying, says Najib

PETALING JAYA: Former prime minister Najib Razak today said the decline of the central bank’s international reserves to US$101.7 billion after the 14th general election (GE14) was a cause for concern.

In a Facebook post, Najib, who is also the former finance minister, said prior to this, Bank Negara Malaysia’s (BNM) international reserves were on the rise.

However, it has been declining due to the continued outflow of foreign funds, he said.

“Before that, it was increasing. Our reserves fell US$8.3 billion (RM35 billion) since mid-April,” Najib, who is Pekan MP, said.

Najib was responding to a statement earlier today by BNM where it said its international reserves as of Oct 31 experienced a decline of US$1.1 billion from just two weeks earlier.

The main components of the international reserves were foreign currency reserves (US$96 billion), International Monetary Fund reserves position (US$900 million), Special Drawing Rights (SDRs) (US$1.1 billion), gold (US$1.5 billion) and other reserve assets (US$2.2 billion).

The central bank also said the reserves are sufficient to finance 7.5 months of retained imports and is 0.9 times the short-term external debt.

Najib said he had concerns about the latter, pointing out that prior to GE14, he had never seen the figure drop below the 1.0 threshold.

He said it was usually 1.1 and above.

“0.9, which is below 1.0, means our reserves are insufficient to pay all short-term external debts when claimed and is a new risk for the country.

“It means we owe foreigners US$100 but we only have foreign currencies amounting to US$90 to pay.

“Guan Eng should pay attention to this,” he said, referring to Finance Minister Lim Guan Eng.

The international reserves of BNM amounted to US$109.5 billion as at April 30.