KUALA LUMPUR: Datuk Seri Rafizi Ramli claims that Malaysia’s national debt has reached an alarming level, with total domestic and external borrowings amounting to RM1.3 trillion as of June, representing 64.7% of the country’s Gross Domestic Product (GDP) - just shy of the statutory debt ceiling of 65%.
The former economy minister said the figures underscored the urgent need for comprehensive reform in debt management, warning that even slight economic disruptions could push national debt beyond safe levels.
“If economic growth slows or global oil and food prices surge, the government could face a real risk of breaching the 65% threshold,” he told the Dewan Rakyat during the Budget 2026 debate on Monday (Oct 13).
The Pandan MP said the figure excluded government guarantees to agencies and government-linked companies (GLCs), as well as public-private partnership (PPP) commitments, which have increased by RM15mil in the past two years.
As of last year, he said off-balance sheet guarantees stood at RM332.8bil, or 17.2% of GDP.
He added that major guaranteed obligations include DanaInfra (RM85bil), the East Coast Rail Link (ECRL) project (RM50bil), PTPTN (RM41bil) and Prasarana (RM42bil).
“When you add 64.7% of direct government debt to 17.2% in guaranteed debt, the true debt exposure reaches 81.9% of the national economy,” Rafizi said.
Although the government maintains that steps are being taken to reduce debt, Rafizi said debt servicing costs have surged from RM40.5bil in 2022 to RM58.3bil projected for 2026, marking an increase of RM17.8bil.
“That increase nearly wipes out the savings achieved from subsidy reforms, which fell from RM67bil in 2022 to RM49bil in 2026.
“In simple terms, all the savings from subsidy cuts are now being used to pay rising interest on debt,” he said.
Rafizi urged a complete overhaul of Malaysia’s debt management system, stressing that fiscal responsibility should not remain solely within the Finance Ministry’s purview.
“Debt management can no longer operate on a ‘business as usual’ basis.
“Major fiscal reforms that affect the people’s pockets must be accompanied by transparency and broader parliamentary scrutiny,” he said.
He called on the Parliamentary Select Committee on Finance and Economy to examine the matter closely, adding that legislative oversight was crucial to reduce both total debt and debt servicing costs “drastically and sustainably”.
