December 2023 TENAGA NASIONAL BERHAD Integrated Annual Report 2023 326 45 FINANCIAL INSTRUMENTS (CONTINUED) (b) Financial risk management (continued) Credit risk (continued) (iv) Financial guarantees (continued) Impairment losses The Company assumes that there is a significant increase in credit risk when a subsidiary or associate has indication of defaulting on its banking facilities. The Company considers a financial guarantee to be credit impaired when the subsidiary or associate is unlikely to repay its credit obligation to the bank in full. The Company determines the probability of default of the guaranteed loans individually using internal information available. Loss allowance has been recognised mainly arising from the financial guarantee provided by the Group in 2016 to support the loan facility offered to İç Anadolu Doğalgaz Elektrik Üretim ve Ticaret A.Ş. (‘ICAN’),a subsidiary of Gama Enerji Anonîm Şîrketî ('Gama Enerji'). The ECL is determined based on an internal assessment of Gama Enerji debt servicing ability taking into account of the current adverse macroeconomic conditions in Türkiye. The impairment loss for financial guarantees for the Group and the Company are in Stage 3. The movement in the loss allowances of financial guarantees during the financial year was: Group Company 2023 RM’million 2022 RM’million 2023 RM’million 2022 RM’million As at the beginning of the financial year (310.6) (291.1) (312.2) (293.4) Impairment loss recognised (1.5) (37.6) (4.2) (37.6) Impairment loss reversed 0 18.1 0 18.8 As at the end of the financial year (Note 23) (312.1) (310.6) (316.4) (312.2) Liquidity risk Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as they fall due. The Group’s and the Company’s exposures to liquidity risk arise principally from its various payables, loans and borrowings. The Group and the Company monitor rolling forecasts of the Group’s and of the Company’s liquidity requirements. As of 31 December 2023, the Company’s current