Prime Minister Datuk Seri Anwar Ibrahim said on Tuesday that the federal government’s debt remains within legal limits, as the administration continues to narrow the fiscal deficit and reduce its reliance on new borrowings.
As of end-June 2025, the country’s statutory debt stood at 62.7% of gross domestic product (GDP) — still below the legislated ceiling of 65%.
Statutory debt includes Malaysian Government Securities (MGS), Government Investment Issues (GII), and Malaysian Islamic Treasury Bills (MITB).
Meanwhile, offshore borrowings totalled RM22.8 billion, well below the RM35 billion limit imposed by the External Loans Act 1963.
Malaysian Treasury Bills (MTB) stood at RM2 billion, also comfortably below the RM10 billion cap under the Treasury Bills (Local) Act 1946, Anwar told the Dewan Rakyat during Prime Minister’s Question Time on Tuesday.
Anwar acknowledged that as long as the national budget remains in deficit, the overall debt level will continue to rise. This has seen Malaysia’s total debt increase to RM1.247 trillion, or 64.6% of GDP, from RM1.079 trillion in 2022.
However, he stressed that the increase in debt is primarily to finance development expenditure aimed at long-term national benefit, not operating expenses.
Anwar highlighted that the government’s fiscal reforms under the Madani administration are yielding results, with the fiscal deficit shrinking for three consecutive years — from 6.4% of GDP in 2021 to 5.5% in 2022, 5.0% in 2023, and 4.1% in 2024.
The narrowing deficit has also led to a reduction in the government’s annual borrowing requirements, which declined from around RM100 billion in 2021 to RM99 billion in 2022, RM92.6 billion in 2023, and RM76.8 billion in 2024.
“The government’s ability to reduce new debt year after year reflects prudent financial management and a strong commitment to ensuring fiscal sustainability without compromising national development,” Anwar said.
Anwar reaffirmed that the government is targeting a fiscal deficit of 3.8% this year and remains committed to fulfilling the requirements of the Public Finance and Fiscal Responsibility Act over the medium term, including ensuring that the national debt does not exceed the prescribed legal threshold.
Under the Act, the Dewan Rakyat must approve any adjustment to the federal government's fiscal targets.
Source: theedgemalaysia