A-G's report: Increasing national debt a worrying trend, says PAC

KUALA LUMPUR: The increasing debt incurred by the Federal Government is a worrying trend, says the Parliament’s Public Accounts Committee (PAC).

PAC chairman Wong Kah Woh said the latest Auditor-General’s Report (LKAN) on the financial statements of the Federal Government revealed that federal debt in 2021 amounted to RM978.8bil - an increase of RM100bil from the previous year.

"PAC is concerned with the increasing trend of the Federal Government's debt which continues to increase every year.

"The Federal Government's debt of RM979.8bil in 2021 is 63.4% of the Gross Domestic Product (GDP).

"This is an increase of RM100bil from 2020 when the Federal Government debt was RM879.5bil.

"This increase has caused the total liability of the Federal Government in 2021 to reach RM1.298 trillion, which is 84% of the country's GDP," said Wong at a press conference in Parliament.

The PAC had been given a briefing of the report by Auditor-General Datuk Seri Nik Azman Nik Abdul Majid earlier.

Wong said one of the concerns revealed in the Auditor-General’s report was how more than half of loans made in 2021 were used to service matured loans.

"In 2021, the government made gross loans amounting to RM217.2bil, an increase of 11.6% from RM194.55bil in the previous year.

"A total of 52.4% or RM113.764bil was used for the principal payment of matured loans.

"As for the total RM62.317bil transferred to the Development Fund, only RM40.994bil (65.8%) was used for development expenditure purposes, compared to RM37.53bil (77.3%) in 2020. So there is a decrease in terms of percentage.

"A total of RM12.612bil (20.2%) is used for the purpose of covering PFI (private finance initiative) liability and guarantee commitment.

"Another RM8.711bil (14%) is used for the purpose of classification of operating expenditure for development," said Wong.

At the same press conference, Nik Azman said the borrowing of money to service debts should only be a short-term measure.

"It is understood that loans are usually made to finance development expenses.

"But because of the Covid-19 pandemic, about half of the loans are used for pandemic-control activities as well as economic generation to help affected companies. This, we can understand.

"But what we are worried about is that this high increase of debt cannot continue.

"It should only be a short-term temporary measure. The government must take corrective action so that the debt situation is manageable and can be controlled," said Nik Azman.

He pointed out that because of the increase in national debt, the interest payment had also gone up - with 16.3% of revenue collected used for that purpose.

"That means, for RM1 revenue collected, 16 sen is used to pay interest. So this needs to be only a temporary measure and as auditors, it is our duty to remind the government on this," said Nik Azman.

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 AG Report , Parliament , Federal Government , Debt , PAC


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