KUALA LUMPUR: The federal debt growth rate is declining, with the rate dropping to 6.4% in 2024 from 8.6% in 2023 and 10.2% in 2022, says the Finance Ministry.
Prime Minister Datuk Seri Anwar Ibrahim said that by the end of December 2024, the debt reached RM1.247 trillion.
He also noted that the government’s gross borrowing in 2024 amounted to RM198bil, a decrease from RM226.6bil the previous year.
“The debt growth rate for 2025 is projected to further reduce to around 6%, reflecting a commitment to maintaining the debt-to-GDP ratio below 60%.
"This trend demonstrates our dedication to ensuring fiscal stability in the medium term," said Anwar in a written Parliamentary reply on Wednesday (March 5).
He was responding to a question from Datuk Shamsulkahar Mohd Jeli (BN-Jempol), who asked the Finance Minister about plans to reduce federal debt below 60% of GDP.
Anwar said borrowing is necessary each year to finance the fiscal deficit and repay maturing debt, given the government's ongoing financial shortfall.
"These borrowings are permitted based on provisions outlined in the relevant debt management acts," he said.
To keep debt levels manageable, he added that the government is implementing several strategies, including fiscal consolidation.
"The fiscal deficit showed a declining trend, at 4.1% of GDP in 2024 compared to 5% in 2023 and 5.5% in 2022.
"In 2025, we are expanding the scope of sales and service taxes and implementing e-invoicing in phases to boost revenue," he said.
“Public expenditure optimisation remains a focus, with targeted subsidy efforts set to expand to RON95 by mid-2025 to curb waste and leakage while protecting vulnerable groups.”
Anwar also said a special committee has been established to rationalise statutory bodies and ensure efficient spending.
He emphasised that government borrowings are strictly for financing development expenditure on high-impact projects.
"Our aim is to ensure that development expenditure remains no less than 3% of GDP," he stated.
He added that the government is revising the implementation and financing methods for mega projects, setting a government guarantee ceiling of 25% of GDP under the Public Financial Act and Fiscal Responsibility Act (FRA) 2023 (Act 850).
"Act 850, effective from January 1, 2024, is expected to enhance debt sustainability, supported by a Medium-Term Revenue Strategy and more responsible spending reviews,” said Anwar.
