KUALA LUMPUR: The federal government has pared down its debt to 63.1% of the gross domestic product (GDP) as of the end of the first quarter of 2026, down from 65.2% in 2025.
In a parliamentary written reply dated July 15, the Finance Ministry confirmed that statutory debt stood at 61.9% of GDP, remaining well below the 65% statutory ceiling.
Offshore borrowings and Malaysian Treasury Bills also stayed safely within their respective legal limits.
The ministry highlighted that structural economic and fiscal reforms have narrowed the fiscal deficit for five consecutive years, dropping from 6.4% in 2021 to 3.7% in 2025, with a target of 3.5% for 2026.
Reflecting this fiscal consolidation, new annual borrowings have steadily decreased from RM100bil in 2021 to RM75.6 bil in 2025.
The government has never defaulted on its interest payments or debt redemptions, supported by a deep domestic financial market and disciplined fiscal management.
The government aims to further reduce the medium-term fiscal deficit to below 3% and cap debt under 60% of GDP, ensuring new loans are used strictly for productive economic development.
The ministry was responding to Rushdan Rusmi (PN-Padang Besar), who had questioned why the debt ratio appeared to be rising despite the government's assertions of responsible fiscal management.
