THE claim that Malaysia owes a lot of money to Indonesia is not true as only 2.5% of federal government debt is foreign-denominated, Finance Minister Tengku Zafrul Abdul Aziz said.

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% of foreign loans cannot all be from Indonesia; it’s not logical. And the remaining 97.5% of the national debt is domestic loans,” he said in a video that was uploaded on Twitter today.

Tengku Zafrul said government borrowings are different from the 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, adding that it is rare for a country to make a direct loan from another country. – Bernama, August 26, 2022.