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New Straits Times

Govt's debt rises to RM1.3 trillion as of end-June

KUALA LUMPUR: The federal government's debt rose to RM1.3 trillion as of the end of June this year, up from RM1.25 trillion at the end of last year. Deputy Finance Minister Lim Hui Ying said the increase was driven by borrowings to finance fiscal obligations and fund development projects. "Government loans are used prudently to finance strategic development projects such as infrastructure, education, health, and social protection programmes," she said in the Dewan Rakyat today. However, by March, the government's liabilities shrank to RM384.6 billion, compared with RM384.8 billion at the end of last year. The federal government's gross borrowings stood at RM197.5 billion in 2024, a decline from RM226.6 billion recorded for the same period in 2023. She said the reduction reflects ongoing fiscal consolidation efforts, with the fiscal deficit narrowing from 5.5 per cent of Gross Domestic Product (GDP) in 2022 to 4 per cent last year, and projected to fall further to 3.8 per cent this year. This is in line with the government's medium-term commitment to keep the fiscal deficit below 3 per cent of GDP and the debt-to-GDP ratio under 60 per cent, as outlined in the Public Finance and Fiscal Responsibility Act 2023, the deputy minister said. "As such, the rate of debt increase showed a downward trend from 10.2 per cent in 2022 to 6.4 per cent last year, and is expected to further decline to 6 per cent this year," she said today. Lim was responding to Datuk Ngeh Koo Ham's (PH-Beruas) parliamentary question on the government's effort to reduce federal debts and liabilities.