KUALA LUMPUR: The 1MDB scandal remains Malaysia’s largest debt burden, with nearly RM50bil in liabilities still weighing on federal finances, Prime Minister Datuk Seri Anwar Ibrahim told the Dewan Rakyat.
He said the government had already paid RM42bil to service 1MDB’s principal and interest obligations, while recoveries from various enforcement efforts had so far returned RM29bil to public coffers.
"However, the pressure from 1MDB remains. We still have about RM13bil left to settle," he said on Tuesday (Dec 2), adding that the legacy debt continued to narrow the government’s fiscal space.
Anwar, who is also Finance Minister, said the administration was strengthening fiscal governance through the Public Finance and Fiscal Responsibility Act 2023, which sets medium-term targets of a 3% fiscal deficit and a 60% debt-to-GDP ratio.
The deficit has continued to narrow, he noted, from 5% in 2023 to 4.1% last year and an estimated 3.8% this year.
He also pointed out that annual new federal borrowings had fallen from RM100bil in 2021 to around RM75bil currently, reflecting "a clear downward trend".
As at the end of December 2025, Malaysia’s outstanding federal debt is estimated at between RM1.3 trillion and RM1.5 trillion. However, the bigger issue is the government’s debt obligations, which must be honoured,” Anwar said during Minister’s Question Time.
Statutory debt is currently at 64% of GDP, below the 65% legal threshold, while offshore borrowings remain manageable at RM22.4bil, well under the 35% limit, he added.
Treasury bills also remain within safe levels at RM4bil, against the ceiling of RM10bil.
Anwar said the government would continue managing liabilities prudently through fiscal consolidation, subsidy reforms, including the restructuring of RON95, and by leveraging private-sector participation under the Public-Private Cooperation Master Plan (Pikas).
"These reforms are necessary to safeguard our fiscal capacity and ensure long-term stability," he said.
