DEBT management in line with global best practices will be central to Malaysia’s path forward, says the Fiscal Outlook 2026.
According to the report, these efforts would be critical to sustain a stable debt trajectory, while ensuring fiscal resilience and maintaining macroeconomic stability.
“Above all, these efforts will enable the government to channel national resources towards inclusive growth and long-term prosperity as it stands guided by the 13th Malaysia Plan,” it said.
It doesn’t come as a surprise that as the country embarks on the said plan, a sound and sustainable framework would be vital in order to accelerate national agendas, with these efforts key for the government to meet financing requirements and mitigate fiscal and market risks.
These measures would also provide a platform to secure competitive borrowing costs, extend the maturity profile and strengthen long-term debt sustainability.
With that, the Fiscal Outlook 2026 noted that for next year, the debt management and financing strategy would focus on optimising debt profile, strengthening risk management practices and diversifying funding sources to ensure stable and cost-effective access to financing.
“The strategy will continue to prioritise a prudent balance between domestic and external borrowings, with a strong preference for ringgit-denominated instruments to mitigate exposure to foreign exchange risks,” the Fiscal Outlook 2026 said.
In addition to that, to widen the investor base and strengthen Malaysia’s leadership in Islamic financing, external financing would be selectively explored through innovative instruments.
“Debt sustainability will be anchored by ongoing fiscal reforms, gradual deficit reduction as well as greater accountability in debt management,” it noted.
While the report said the country’s debt management for 2026 to 2030 remains broadly manageable, heightened risks have clearly emphasised the need to enhance fiscal buffers.
Meanwhile, the report also made note of the federal government’s debt, which stood at RM1.30 trillion – of this, 98.3% comprised domestic debt, with offshore borrowings reduced to 1.7%.
Malaysia’s public sector debt stands at RM1.73 trillion as of the end of June 2025.
The report said the 4.2% increase was on the back of higher federal government borrowings, accounting for 75.4% of total public sector debt.
As for Malaysia’s external debt, it also grew 3.9% to RM1.40 trillion as of the end of June 2025 due to stronger non-resident participation in government domestic debt securities and higher net issuances of bonds and notes abroad by public corporations.
“Malaysia external debt remains manageable, supported by a favourable maturity structure and diversified currency composition, coupled with prudent safeguards by Bank Negara Malaysia,” the report said.
