Civil servants in Malaysia spend over half of their monthly salaries on repaying debts, a study by Bank Negara recently revealed.

In its article featured in Financial Stability Review report, it noted that this trend is more apparent in officials earning less than RM5,000 (S$1,650) monthly. After considering their monthly expenditure on basic necessities and debt obligations, they are left with only 15 percent or about RM360 to RM586 to spend on discretionary items.

Almost half of the borrowings (47 percent) went for consumption purposes such as personal financing, motor vehicles, credit cards, and others. This number is higher than the national average of 35 percent. Personal financing has been one of the major contributors to debt accumulation by civil servants as it amounts to 34 percent of their total debt, two-times higher compared to the national level of 15 percent. Meanwhile, housing debts account for 49 percent of civil servants’ debts. All of these expenses leave them with limited financial buffers to weather shocks.

“Based on anecdotal evidence, personal financing is commonly used to sustain the standard of living and lifestyle choices of borrowers and for small business use,” the central bank article said.

It also stated that the debt repayment capacity of civil servants remained lower than the average borrowers at the national level, and while this currently posed limited financial stability risks, it could have broader socio-economic implications, Straits Times reports.

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